Project report

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Institute of banking and finance
SHELL PAKISTAN LIMITED
PROJECT REPORT
ON
SHELL PAKISTAN
BAHAUDDIN ZAKRIYA
UNIVERSITY
MULTAN

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Credit Management
Submitted to
Sir khalid sultan anjum
Submitted by
Muhammad Waqas
Roll no.
mbkm-14-26
program
mba (banking & finance)
morning 6th
semester
session
2014-2017

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DEDICATION
We would like to dedicate this project to our parents who cherished us in our
childhood and always pray for our better future.
ACKNOWLEDGEMENT

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All praises and thanks to Almighty ALLAH, the creator who is the only source of
knowledge and wisdom endowed to mankind.
I feel much obliged to our beloved family members for their moral support and
encouragement. Particularly,wehavealways been feeling our parents rightbehind
us praying, patronizing and enabling us to work out the era of life both spiritually
and physically and whose prayers was incessant enabling us to acquire this stay.
I would like to thank our instructor Sir, KHALID SULTAN ANJUM who was always
there to guide us throughoutthe projectand without his guidance we would have
never been able to accomplish this task. We are also grateful to the Territory
Manager of SHELL PETROL.Wearealso very gratefulto all our well-wishersfortheir
support, love and sincerity. May Allah give them reward in his bless and love.
TABLE OF CONTENTS

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Table of Contents
Ch #1: Introduction to Shell Pakistan Limited.............................................................................
Breif History and Introduction .......................................................................................................
Vision Statement ............................................................................................................................
Mission Statement ..........................................................................................................................
Core Values ....................................................................................................................................
Market Share of Shell Pakistan ......................................................................................................
Ch #2: Management of Financial Risk...........................................................................................
Risk Management Process..............................................................................................................
Financial statement of Shell Pakistan ............................................................................................
Ch #3: Ratio Analysis ......................................................................................................................
Ratio Analysis and Its Advantages.................................................................................................
Liquidity Ratios ..............................................................................................................................
Slovency Ratios ..............................................................................................................................
Activity Ratios................................................................................................................................
Profitability Ratios..........................................................................................................................
Ch #4: Shell Pakistan Strategic Management ...............................................................................
Ch #5: Shell Pakistan SWOT Analysis ..........................................................................................
Ch #6: Shell Pakistan PESTAL Analysis.......................................................................................
Ch #7: Conclusion, Findings and Recommendations ...................................................................

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Executive Summary
Shell is a superior brand name with more than 100 years history in this region, in
fact the company is still in possession of a fuel storage tank from 1899. However,
the documented history of the Royal Dutch/shellgroup the Indo-Pak subcontinent
dates back to 1903 when a partnership was struck between the shell transporter
and tradingcompanyand the RoyalDutchpetroleumcompanyto supplypetroleum
products in Asia.
With their key indicators of progress already soaring to new heights, Shell is
committed to dedicate all its energies, resourcesandthe time to bringhigher value
and satisfaction to their customers, employees and shareholders.
The graph of Shell is going up every year. The ratio of profit is increasing at good
percentage. Shell is serving the people at high level of standard by going according
to the wishes of the customers.
CHAPTER 1
INTRODUCTION

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Shell is aglobalgroup of energy and petrochemicals companies. According to the manager, “With
around 101,000 employees in more than 140 countries and territories, Shell helps to meet the
world's growing demand for energy in economically, environmentally and socially responsible
ways”.
The Shell brand is one of the most familiar commercial symbols in the world. Royal Dutch Shell is
the world's largest private sector oil company by revenue, Europe's largest energy group and a
major player in the petrochemical industry. One of North America's leading producers of oil, gas,
and petrochemicals, Shell Oil Company has distinguished itself through its commitment to
industry innovation. Its marketing expertise has enabled the company to compensate for its
relatively low volume of crude oilproduction, as compared to its strongest competitors, by selling
an equivalent amount of gasoline nationwide.
Although the company conducts business primarily in the United States, Shell also explores for
and produces crude oil and natural gas outside the country, both independently and through
joint ventures with other subsidiaries of its parent organization, Royal Dutch/Shell Group. Shell
Petroleum Inc. is a holding company that is 60 percent owned by Royal Dutch Petroleum
Company and 40 percent owned by The Shell Transport and Trading Company.
Shell has five core businesses: exploration and production, gas and power, refining and
marketing, chemicals, and trading and shipping. Shell's primary business is the management of a
vertically integrated oil company. The development of technical and commercial expertise in all
the stages of this vertical integration from the initial search for oil (exploration) through its
harvesting (production), transportation, refining and finally trading and marketing established
the core competencies on which the company was founded. Similar competencies were required
for natural gas, which has become one of
The most important businesses in which Shell is involved, and which contributes a significant
proportion of the company's profits.
Over the years Shell has occasionally sought to diversify away from its core oil, gas and chemicals
businesses. These diversifications have included nuclear power (a short-lived and costly joint
venture with Gulf Oil in the USA); coal (Shell Coal was for a time a significant player in mining and
marketing); metals (Shell acquired the Dutch metals-mining company Billiton in 1970) and
electricity generation (a joint venture with Bechl called Intergen). None of these ventures were
seen as successful and all have now been divested.
If we talk about a single franchise, it provides:
 Oil change service

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 Convenience store
 Gas
 Petrol
MISSION STATEMENT
Manager of Shell in Islamabad defined the mission statement of Shell Petroleum Pakistan as:
“Our aim is to meet the energy needs of society, in ways that are economically, socially and
environmentally viable, now and in the future.”
Shell is basically an oil company. Its products include oils, fuels, and card services as well as
exploration, production, and refining of petroleum products. The mission of this organization is
to manufacture and supply oil products and services that satisfy the needs of their customers.
Constantly achieving operational excellence,conducting their business in a safe,environmentally
sustainable and economically optimum manner, employing a diverse, innovative and results-
oriented team motivated to deliver excellencei. Obviously, an organization’s main purpose is
meeting its profit requirement, so Shell wants to meet the energy needs of the society with high
financial performance.
VISION STATEMENT
To be the market leader and deliver the best value to their; stake holders.ii As the manager said:
“Our vision is to reinforce our position as a leader in the oil and gas industry in order to
provide a competitive shareholderreturn while helping to meet globalenergy demand in
a responsible way”.
In Upstream they focus on exploring for new oil and gas reserves and developing major projects
where their technology and know-how adds value to the resource holders.
In Downstream their emphasis remains on sustained cash generation from their existing assets
and selective investments in growth markets.iii
So, overall the vision of organization is to lead the oil and gas industry and to develop itself
according to the change in demand of their customers in a profitable way but at the same time,
this way should be environmental friendly and should not cause any harm to the social values.
Shell is also working for many social causes by operating different NGOs for deforestation,
betterment of education.
The documented history of Royal Dutch Shellplc in Indo Pakistan subcontinent dates back to 1903
when partnership was struck between The Shell Transport & Trading Company and the Royal
Dutch Petroleum Company to supply petroleum to Asia.
In 1928, to enhance their distribution capabilities, the marketing interest of Royal Dutch Shell plc
and the Burmah Oil Company Limited in India were merged and Burmah Shell Oil Storage &
Distribution Company of India was born. After the independence of Pakistan in 1947, the name

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was changed to the Burmah Shell OilDistribution 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.
Financialframework
Shell’s strategy and financial framework are designed to manage through multi- year
macroeconomic cycles and multi-decade investment and returns programmes. We balance near-
term affordability and cost trends with the fundamentally long-term nature of our industry.
The balance sheet must support dividends and re-investment through the low points in oil market
cycles. Shell intention is to generate sufficient free cash flow at the lower end of the price cycle to
cover the cash dividend.
Cash flow priorities 2016–18
Priorities for cash
1) Debt reduction
2) Dividends
3) Buybacks and capital investment
Our priorities for cash flow are reducing debt and paying dividends, followed by a balance of share
buybacks and capital investment.
Shell’s dividend distributed in 2016 was $15 billion. Its dividend policy is to grow the US dollar
dividend through time, in line with our view of Shell’s underlying earnings and cash flow. When
setting the dividend, the Board looks at a range of factors, including the macroeconomic
environment, the current balance sheet and future investment plans. They see potential for at least
$25 billion of buybacks in the period 2017-2020, subject to debt reduction and recovery in oil
prices.
We have identified four levers to manage through the market down-cycle: divestments, reduced
capital investment and operating expenses, and delivering new projects that will add significant
cash flow.
MANAGEMENT OF SHELL PAKISTAN

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Farooq Rehmatullah succeeded David M Weston in 2001, to become the first Pakistani national
CEO of SPL. He retired in 2006. SPL Managing Directors
 Farooq Rehmatullah – April 2001-June 2006
 Quentin D’Silva – May–August 2006
 Zaiviji Ismail bin Abdullah – September 2006-July 2011
 Sarim Sheikh – April 2011-July 2012
 Omar Y Sheikh – June 2012 – July 2016
 Jawwad A Cheema - August 2016 - Present
Jawwad A Cheema is the CEO and Managing Director of Shell Pakistan Limited. He is also the
Vice President for Shell Business Operations and custodian of Shell Group’s strategy for off-
shored business operations that is delivered through a network of seven Business Service Centers
across the world. He joined Shell in 1997 in Pakistan and worked in the Retail Business for almost
eight years in various specializations before moving to global roles outside Pakistan. Prior to this
role, he has held several senior leadership roles within the Shell Group. He was the Consultancy
Manager in the Downstream Strategy & Consultancy team, Customer Experience Manager
managing Global Operational Excellence for Retail and Retail General Manager in Indonesia
managing Retail’s entry into this new market.
Board of Directors
 Jawwad Ahmed Cheema (Chairman)
 Faisal Waheed
 Rafi H Basheer
 Farrokh K Captain
 Imran R Ibrahim
 Nasser N S Jaffer
 Zaffar A Khan
 Haroon Rashid
 Badaruddin F Vellani
 Moon Hussain
 Klaas Mantel
Mr. Faisal Waheed is Chief Financial Officer, Finance Director, and Executive Director of Shell
Pakistan Limited. He is a graduate of IBA, Karachi and an associatemember of Chartered institute
of Management Accountants, UK. Mr. Waheed joined Shell in 2013 in his current capacity. Before
this, he had an experience of 11 years in different finance and information management positions
at Unilever in Pakistan and the UK. He moved to Engro Corporation in 2010, where he last served
as Chief Financial Officer of one of its subsidiaries. He also serves on the boards of Pakistan
Refinery Limited and Pak Arab Pipeline Company Limited.

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BASIC BUSINESS PRINCIPLES OF SHELL PAKISTAN
PRINCIPLE 1: ECONOMIC
Long-term profitability is essential to achieving our business goals and to our continued Growth.
It is a measure both of efficiency and of the value that customers place on Shell Pakistan Limited
products and services. It supplies the necessary corporate resources for the Continuing
investment that is required to develop and produce future energy supplies to Meet customer
needs. Without profits and a strong financial foundation, it would not be Possible to fulfil our
responsibilities.
PRINCIPLE 2: COMPETITION
Shell Pakistan Limited supports free enterprise. We seek to compete fairly and ethically and
Within the framework of applicablecompetition laws;we will not prevent others from competing
Freely with us.
PRINCIPLE 3: BUSINESS INTEGRITY
Shell Pakistan Limited insists on honesty, integrity and fairness in all aspects of our business and
expects the same in our relationships with all those with whom we do business. The Direct or
indirect offer, payment, soliciting or acceptance of bribes in any form is unacceptable. Facilitation
payments are also bribes and should not be made. Employees must avoid conflicts of interest
between their private activities and their part in the conduct of Company business. Employees
must also declare to their employing Company potential conflicts of interest. All Business
transactions on behalf of Shell Pakistan Limited must be reflected accurately and Fairly in the
accounts of the Company in accordance with established procedures and are Subject to audit
and disclosure.
PRINCIPLE 4: POLITICAL ACTIVITIES
A. OF COMPANIES
Shell Pakistan Limited acts in a socially responsible manner within the laws of the country in
Which we operate in pursuit of our legitimate commercial objectives. Shell Pakistan Limited
Does not make payments to political parties, organizations or their representatives. Shell
Pakistan Limited does not take part in party politics. However, when dealing with the
government,
Shell Pakistan Limited has the right and the responsibility to make our position known on
Matters which affect us, our employees, our customers, our shareholders or local communities
In a manner which is in accordance with our values and the Business Principles.
B. OF EMPLOYEES
Where individuals 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 circumstance.

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PRICIPLE 5: HEALTH, SAFETY, SECURITY AND THE ENVIRONMENT
Shell Pakistan Limited has a systematic approach to health, safety, security and environmental
Management in order to achieve continuous performance improvement. To this end, Shell
Pakistan Limited manages these matters as critical business activities, sets standards and targets
for improvement, and measures, appraises and reports performance externally. We continually
look for ways to reduce the environmental impact of our operations, products and services.
PRINCIPLE 6: LOCAL COMMUNITIES
Shell Pakistan Limited aims to be good neighbors by continuously improving the ways in which
we contribute directly or indirectly to the general well-being of the communities within which
we work.
We manage the social impacts of our business activities carefully and work with others to
enhance the benefits to local communities, and to mitigate any negative impacts from our
Activities.
In addition, Shell Pakistan Limited takes a constructive interest in social matters, directly or
Indirectly related to our business.
PRINCIPLE 7: COMMUNICATION AND ENGAGEMENT
Shell Pakistan Limited recognizes that regular dialogue and engagement with our stakeholders is
essential. We are committed to reporting our performance by providing complete relevant
information to legitimately interested parties, subject to any overriding considerations of
business confidentiality.
In our interactions with employees, business partners and local communities, we seek to listen
and respond to them honestly and responsibly.
PRINCIPLE 8; COMPLIANCE
We comply with all applicable laws and regulations of the countries in which we operate.
PRINCIPLE 9: LIVING BY OUR PRINCIPLES
Our shared core values of honesty, integrity and respect for people, underpin all the work we do
and are the foundation of our Business Principles. The Business Principles apply to all
transactions, large or small, and drive the behavior expected of every employee in Shell Pakistan
Limited in the conduct of its business at all times. We are judged by how we act. Our reputation
will be upheld if we act in accordance with the law and the Business Principles. We encourage
our business partners to live by them or by equivalent principles. We encourage our employees
to demonstrate leadership, accountability and teamwork, and through these behaviors, to
contribute to the overall success of Shell Pakistan Limited. It is the responsibility of management
to lead by example, to ensure that all employees are aware of these principles, and behave in
accordance with the spirit as well as with the letter of this statement.
The application of these principles is underpinned by a comprehensive set of assurance
procedures which are designed to make sure that our employees understand the principles and
confirm that they act in accordance with them.

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As part of the assurancesystem, it is alsothe responsibilityof management to provide employees
With safe and confidential channels to raise concerns and report instances of Non-compliance.
In turn, it is the responsibility of Shell Pakistan Limited employees to report suspected breaches
of the Business Principles to Shell Pakistan Limited. The Business Principles have for many years
been fundamental to how we conduct our business and living by them is crucial to our continued
success.
MARKETTRENDS AND RANKING OF THE COMPANY WITH ITS MARKETSHARE
At the moment Shell Pak. has a market share of about 40% to 45% in Pakistan. It is trying hard to
become the market leader in Pakistan. Shell has strong distribution channels. Their market size
is very large. Therefore, marketing staff is very efficient and their main objective is satisfying the
customer and people have the brand loyalty.
Market leadership due to innovation:
Shell is considered to be the market leader in innovation. It was the first company to get legal
approval to operate mini-market. It was the first among its competitors to introduce (rainbow)
jet wash and (prosper) branded oil change facility. It provides suggestive literatures to its
customers while launching a new product such as Helix super and Helix Lubricant etc.
It was also the first company to introduce the concept of Mobile Training Unit (MTU) for the
purpose of training the workers and workers and introducing quality and quantity control units,
which check the quality and quantity of major gasoline at various filing stations.
Product knowledge:
As there are so many products offered by the shell, it is very important that the customers have
full knowledge about the product. Shell Pakistan informs customers by their marketing and
positions itself in their mind.
Subliminal marketing:
According to the shell manager they do subliminal marketing by keeping their prices high. High
prices mean superiority. This will automatically appeal to the customers as this is human
psychology high prices means high quality. So shellwillbe considered as the best quality provider.
Shell is always observing the new trends of the market; it has accepted the new trends and is
constantly in a process of developing itself according to the needs of the new era. According to
consulted manager of shell:
“The 19th century was about coal, the 20th century about oil and the fuel of the 21st century
will be gas”.
So, now the organization is developing itself according to the modern needs. They believe that
the global trend is now towards cleaner fuel and advances in technology. Their vision includes to

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develop themselves according to the changing environment and to provide quality service to
their customers. They have always ensured the quality of their service to be the prior job.
In addition to the technology that allows them to discover oil and to produce it, the technology
which; allows us to safeguard the environment has changed too. With this, they have developed
their organization accordingly. They seek a high standard of performance, maintaining a strong
long-term and growing position in the competitive environments in which they choose to
operate.iv
Shell is the world’s second largest oil and lubricants company with its market share of
SHELL WORLDWIDE
Shell is a global group of energy and petrochemical companies. Their headquarters are in The
Hague, the Netherlands, and Chief Executive Officer is Peter Voser. The parent company of the
Shell group is Royal Dutch Shell plc, which is incorporated in England and Wales.
Shell strategy seeks to reinforce their position as a leader in the oil and gas industry in order to
provide a competitive shareholder return while helping to meet global energy demand in
a responsible way.
In Upstream they focus on exploring for new oil and gas reserves and developing major projects
where their technology and know-how adds value to the resource holders.
In Downstream they emphasis remains on sustained cash generation from our existing assets
and selective investments in growth markets.
Their core values of honesty, integrity and respect for people form the basis of the Shell
General Business Principles.
Shell by numbers:
 + 90 countries where they operate
 ~101,000 number of employees
 2% amount of world’s oil thy produce
 3% amount of world’s gas thy produce
 3.1 million barrels of gas and oil thy produce every day
 44,000 Shell service stations worldwide
 145 billion liters of fuel sold
 >35 refineries and chemical plants thy run (figures for 2009)
 1 ranking by Fortune 500 in 2009

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Shell has an over 100 year’s presence in the Subcontinent
With the help of the consulted manager of Shell and the collective research of group members,
the detailed history of Shell organization was gathered which is explained in the following text:
CHAPTER 2
FINANCIAL RISK MANAGEMENT
The Company's activities expose it to a variety of financial risks namely credit risk, foreign
exchange risk, interest rate risk and liquidity risk. The Company finances its operations through
equity, borrowings and management of working capital with a view of maintaining an
appropriate mix between various sources of finance to minimize risk and provide maximum
return to shareholders.
Credit risk
Credit risk represents the accounting loss that would be recognized at the reporting date if
counter parties failed completely to perform as contracted. Credit risk arises from cash and cash
equivalents and deposits with banks and financial institutions, as well as credit exposures to
customers, including trade receivables and committed transactions. The maximum credit risk is
equal to the carrying amount of financial assets. Out of the financial assets aggregating Rs.
9,963,818 thousand (2015: Rs. 6,124,487 thousand) the financial assets subject to credit risk

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amount to Rs. 9,942,964 thousand (2015: Rs. 6,103,929 thousand). For banks and financial
institutions, only independently rated parties with reasonably high credit rating are accepted. For
trade receivables, internal risk assessment process determines the credit quality of the customer,
taking into account its financial position, past experience and other factors. Individual risk limits
are set based on internal or external ratings in accordance with limits set by the management.
The utilization of credit limits is regularly monitored. Concentrations of credit risk arise when a
number of counterparties are engaged in similar business activities or have similar economic
features that would cause their ability to meet contractual obligations to be similarly affected by
changes in economic, political or other conditions. Concentrations of credit risk indicate the
relative sensitivity of the Company's performance to developments affecting a particular
industry. The most significant financial assets exposed to credit risk are trade debts and other
receivables of the Company. The utilization of credit limits is regularly monitored. The carrying
values of financial assets which are neither past due nor impaired are as under: The credit quality
of receivables can be assessed with reference to their historical performance with no or some
defaults in recent history, however, no losses. The credit quality of Company’s bank balances
can be assessed with reference to external credit ratings.
Market risk
Market risk is the risk that the value of the financial instruments may fluctuate as a result of
changes in market interest rates, foreign exchange rates or the equity prices due to a change in
credit rating of the issuer or the instrument, change in market sentiments, speculative activities,
supply and demand of securities and liquidity in the market.
i) Currency risk
Currency risk is the risk that the fair value of future cash flows of a financial instrument will
fluctuate because of changes in foreign exchange rates. Foreign currency risk arises mainly
where payables exist due to imports of goods and transactions with foreign related parties as well
as trade receivables from foreign related parties. The Company primarily has foreign currency
exposures in US Dollar (USD), Great Britain Pounds (GBP) and Euro (EUR).As at December
31, 2016, had the exchange rates of USD, GBP and EUR appreciated or depreciated against the
currency with all other variables held constant, the change in post-tax profit / loss would have
been as follows:
ii) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market interest rates. As the Company has no significant interest-
bearing assets, the Company’s income and operating cash flows are substantially independent of
changes in market interest rates. The Company’s interest rate risk arises from short-term loans
and running finance facilities. Loans and running finance obtained at variable rates expose the
Company to cash flow interest rate risk. The Company analyses its interest rate exposure on a
regular basis by monitoring existing facilities against prevailing market interest rates and taking
into account various other financing options available. At December 31, 2016, had interest rates
on Company’s borrowings been 1% higher/ lower with all other variables held constant, post-tax
profit for the year would have been lower / higher by Nil (2015: Rs. 13,773 thousand) as a result
of no variable rate borrowings outstanding as at the balance sheet date.
iii) Price risk
Price risk represents the risk that the fair value or future cash flows of financial instruments will
fluctuate because of changes in market prices (other than those arising from currency risk or

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interest rate risk), whether those changes are caused by factors specific to the individual financial
instruments or its issuer or factors affecting all similar financial Instruments traded in the market.
The Company is not exposed to equity securities price risk as currently the Company has no
investments in listed securities.
Liquidity risk
Liquidity risk is the risk that an enterprise will encounter difficulties in raising funds to meet
commitments associated with financial instruments. Through its treasury function, the Company
continually monitors its liquidity position and Ensures availability of funds by maintaining
flexibility in funding by keeping committed credit lines available. The maturity profile of the
Company's liabilities based on contractual maturities is disclosed in these financial statements.
Capital risk management
The Company's prime objective when managing capital is to safeguard its ability to continue as a
going concern, maintain healthy capital ratios, strong credit rating and optimal capital structure
in order to ensure ample availability of finance for its existing and potential investment projects,
to maximize shareholder value and reduce the cost of Capital. In order to maintain or adjust the
capital structure, the Company may adjust the amount of dividends paid to shareholders, issue
new shares or sell assets to reduce debt. Consistent with others in the industry, the Company
monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by
total capital. Net debt is calculated as total borrowings less cash and bank balances. Total capital
is calculated as equity as shown in the balance sheet plus net debt. During the year, the
Company’s strategy was to minimize leveraged gearing. The Company finances its expansion
projects through equity, borrowings and management of its working capital with a view to
maintaining an appropriate mix between various sources of finance to minimize risk. As of the
balance sheet date, the Company was fully financed through

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BALANCE SHEET
SHELL PAKISTAN
FOR THE YEAR ENDED 2016

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BALANCE SHEET
SHELL PAKISTAN
FOR THE YEAR ENDED 2015
BalanceSheet
AsatDecember31,2015

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PROFIT AND LOSS ACCOUNT
SHELL PAKISTAN

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CHAPTER 3
Extracting Ratios from Company financial statement (Analysis of financial statement).
LIQUIDITY RATIOS
Liquidity ratios are used to measure a firm’s ability to meet short term obligation. They
compare short term obligation with short term resources available to meet these obligation.
The liquidity ratios reflect the sufficiency of cash in the firm to meet its liabilities. Those
liabilities maturing for payment within the next 12 months are termed current liabilities. Such
liabilities will be paid through generating cash and other liquid assets through working capital
operating cycle.
Current Ratio = Current Assets/Current liabilities
For year 2014 For year 2015 For year 2016
Current ratio=
27,724,683/32,642,090
Current ratio =
26,235,785/31,448,155
Current ratio =
27,239,755/31,316,757
Current ratio = 0.85 Current ratio = 0.83 Current ratio = 0.87
It measures the ability of the business unit to meets its current obligation. In case of Shell
Pakistan this ability is slightly appreciated in 2016.This shows that operating cycle of shell
Pakistan is shorter.
Quick Ratio =Cash +Cash Equivalents + Short term Investment + Current
Receivable/Current liabilities
Quick Ratio
=12,95633+0+11028527
Quick ratio = 21,03517 +0
+85,98668/31,488,155
Quick ratio = 5,988,405
+0+8,417,830/31,316,757
Quick Ratio =0.38 Quick ratio = 0.34 Quick ratio = 0.46
This ratio relates the more liquid assets to current liabilities. The Liquid assets recoverable at
hand are only 46% over the current liabilities in year 2016, which is not satisfactory for the
lending company.
Looking at the liquidity ratios for Shell Pakistan the current ratio shows that the current assets
can only cover 87% over the current liabilities in a period of 12 months.
The Acid test ratio indicates that the recovery of only most liquid assets possible is at 46%,
which is not a very good sign for the financial institutions.
The net working capital is negative i.e. below unity. The Current liabilities exceed the current
assets by an amount of -4077002, which implies that
The lending bank is running a more than normal financial risk in respect to Shell Pakistan.
Inventory turnover has decreased from the previous year, which is a not a favorable sign for the
lending institutions.
The Liquidity Ratios in respect for Shell Pakistan do not seem to be so favorable for them when
regarded in respect for borrowings by the lending institutions for approval of finance for the
company.

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LEVERAGE RATIOS
The leverage position of accompany indicates the amount of other people’s money being used
to generates profits. These Ratios reflect the financial risk inherent in the borrower firm. The
Banks needs to assess the leverage of the borrower from the viewpoint of debt service, the firm
size, and industry practices.
Debt Ratio = Total debt/Total assets
Debt Ratio
=32783700/38678765
Debt ratio =
31,953,621/37,934,443
Debt ratio =
31,400,649/42,510,431
Debt Ratio =0.85 Debt ratio = 0.84 Debt ratio = 0.74
The debt ratio measure the proportion of total assets financed by the firm’s creditors and it
helps to determine how well creditors are protected in case of insolvency. For shell Pakistan
this ratio is decreasing year by year shows a positive trend.it means company is improving in
term of debt ratio with the passage of time.
Debt -Equity Ratio = Total debt/Shareholders equity
This Ratio is intended to measure the long-term solvency of the firm and the relative stakes of
the capital holders of the firm, debt holders vs. equity holders.
Debt -Equity Ratio
=32783700/5895065
Debt-Equity ratio=
31,953,621/5,980,822
Debt-Equity ratio=
31,400,649/11,109,782
Debt -Equity Ratio
=5.56
Debt-Equity ratio= 5.34 Debt-Equity ratio= 2.82
This ratio tells that how much creditors are providing financing against shareholders capital.
Creditors would generally like this ratio be low. In 2015, Shell Pakistan’s Debt to Equity Ratio
was 5.34 whereas in 2016 it is 2.82, which is a good sign as Shell Pakistan is more relying on its
equity than its debt comparatively to the year 2015.
ACTIVITY RATIOS
Activity ratios are also called efficiency or turnover ratios, measures how efficiently the firm is
using its assets.
Inventory Turn Over = Cost of goods sold/Average Inventory
This Ratio measures the number of times, on average; the inventory is sold during a year. Its
purpose is to measure the liquidity of the inventory.
Inventory
turnover=243203242/2
6367474
Inventory
turnover=186533476/13281189+
13086285/2
Inventory
turnover=153638427/10366172+
13281189/2
Inventory turnover=
9.22
Inventory turnover = 14 Inventory turnover = 13

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Inventory turnover is used to determine how effectively the firm is managing inventory and also
gain an indication of the liquidity of inventory. It tells how many times inventory is turned over
receivables. For Inventory turnover only a comparison with industry average or historical
comparison can be meaningful. So, in 2015 the inventory turnover is 14 and in 2016 it is 13.
Which means that the average number of times the inventory sold during the year of Shell
Pakistan has decreased which means that the revenue has fall from the previous year.
Days sales in Receivables = Gross Receivables/Net sales/365
Days sales in
Receivables
=11028527/291362990
/365
Days sales in
Receivables=8598668/24857059
7/365
Days sales in
Receivables=8417830/21485274
6/365
Days sales in
Receivables = 13.82
Days sales in Receivables=
12.63
Days sales in Receivables= 14.3
This ratio tells us the number of time accounts receivable have been turned into cash during
the year. Average collection period is increased in 2016 as compared to previous year, it means
it took more time to collect cash.
Total Assets Turnover = Net Sales/Average Total Assets
Total Assets Turnover
=291362990/7661320
8
Total Assets Turnover=
248570597/37934443+38678765/
2
Total Assets Turnover=
214852746/42510431+37934443/
2
Total Assets Turnover
=3.80
Total Assets Turnover= 3.24 Total Assets Turnover= 2.67
Total assets turnover indicates the efficiency with which the firm use its assets to generate
sales. Generally higher firms total assets turnover is preferable. In case of shell Pakistan asset
turnover in decreasing gradually year by year which means firms operations have been
becoming less efficient.

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PROFITABILITYRATIOS
Profitability ratios measures the firm’s ability of firm to generate earnings.
Net Profit Margin = Net profit after taxes/Net sales
Net Profit Margin
=1067133/291362990
Net Profit Margin
=910970/248570597
Net Profit Margin
=6764907/214852746
Net Profit Margin
=0.37%
Net Profit Margin = 0.37% Net Profit Margin = 3.15%
Net profit margin measure the percentage of each sales rupees remaining after all costs and
expenses have been deducted. This ratio is increased in 2016 which shows more profitable
business than the previous year.
Gross Profit Margin = Gross Profit/Net Sales
This Ratio measures the manufacturing efficiency in the case of manufacturing firms and
the direct contribution from sales in other firms. This ratio measures operational
efficiency
Gross Profit Margin
=7581499/291362990
Gross Profit Margin =
10594875/248570957
Gross Profit Margin =
14003175/214852746
Gross Profit Margin
=2.60%
Gross Profit Margin =4.26% Gross Profit Margin =
6.51%
This ratio is steadily increased from 2014, to 2016 and hence the gross profit has
increased and so has the gross profit ratio, which shows operational efficiency has
increased comparatively.
Return on Investment = Net profit after taxes/Average TotalAssets
Return on Investment
=(1067133)/38678765
Return on Investment =
910970/37934443+38678765/2
Return on Investment =
6764907/42510431+37934443
Return on Investment
= -2.75%
Return on Investment = 1.2% Return on Investment = 8.41%
Return on investment is also called Return on assets, measures the overall effectiveness of
management in generating profits with its available assets. The more the assets have been
worked for higher returns, the higher the ROA, further, ROA is the product of the profit margin,
a measure of expense control, and asset utilization, the gross yield on assets. This Ratio is a
measure of the effectiveness and skills of the management as to how productively have they
used the assets of the enterprise to earn profits, which is totally positive in 2016 but a not much
encourage able ratio in 2015 and 2014 because of the net loss of Shell Pakistan.

25 | P a g e
CHAPTER 4
BUSINESS STRATEGIESOF SHELL
A strategy of corporation forms a comprehensive master plan stating how the corporation will
achieve its mission and objectives. It maximizes competitive advantage and minimizes
competitive disadvantage. The strategy of Shell is to grow internally by expanding its operations
through acquisition and strategic alliances. Shell focuses to differentiate its products from
competitors in the area of quality and services.
POLICIES
A policy is a broad guideline for decision-making that links the formulation of strategy with its
implementation. The policy of Shell is to make sure that the employees throughout the firm
make decisions and take actions that support the corporation’s mission, objectives, and
strategies.
STRATEGIC MANAGEMENT
There is a strong case of linkage “good management “to how well managers craft and execute
strategy. Some managers design shrewd strategies but fail to carry them out well. Others
design mediocre strategies but execute them competently. Both situation performance despite
unforeseeable events, potent competition, and internal problems.
THE FIVE TASKS OF STRATEGIC MANAGEMENT
The strategy making, strategy-implementing process consists of five interrelated managerial
tasks.
1.Deciding what business the company will be in and forming a strategy vision of where the
organization needs to be headed.
2. Converting the strategic vision and mission into measurable objective and performance
targets.
3.Crafting a strategy to achieve the desire results.
4. Implementing and executing the chosen strategy efficiently and effectively.
5. Evaluating performance reviewing new developments, and initiating corrective adjustments
in long-term direction objectives.
WHY COMPANY STRATEGIES EVOLVE
Frequently fine tuning and tweaking of a company strategy. First in one department or
functional area and then in another, are quite normal. On occasion, quantum changes in
strategy are called for when a competitor makes a dramatic move, when technological
breakthroughs occur or when crises strikes and managers are forced to makes a radical strategy
alteration very quickly. Because strategy move and new action approaches are ongoing across
the business.
An organization’s strategy forms over a period of time and then reform the number of changes
begins to mount. Current strategy is typically a blend of holdover approaches fresh actions and
reactions, and potential moves in the planning stage. Except for crises situations (where many

26 | P a g e
strategy moves are often made quickly to produce a substantially new strategy almost
overnight) and new company starts - ups (where strategy exists mostly in the form of plans and
intended actions), it is common for key elements of company to emerge in bits and pieces as
the business develops.
WHAT DOES A COMPANY’S STRATEGY CONSIST OF?
Company’s strategies concern how: how to grow the business, how to satisfy customers, how
to auto compete rivals, how to response to changing market conditions, how to manage each
functional piece of business, how to achieve strategic and financial objectives.
STRATEGY AND STRATEGIC PLANS
Developing a strategic vision and mission, establishing objectives, and deciding on a strategy
are basic direction-setting tasks. They map out where the organization is headed, its short
range and long-range performance targets, and the competitive moves and internal action
approaches to be used in achieving the targeted results. Together, they constitute a strategic
plan.
Annual strategic plan seldom anticipate all the strategically relevant events that will transpire in
the next 12 months. Unforeseen events, unexpected opportunities or threats, plus the constant
bubbling up of new proposal encourages managers to modify planned actions forge
“unplanned” reactions postponing the redrafting of strategy until its time to work on next
year’s strategic plan is both foolish and unnecessary.
STRATEGY IMLEMENTATIONAL EXECUTION
The administrative is to create “fits” between the way things are done and what it takes for
effective strategy execution. The stronger the fits the better the execution strategy. The most
important fits are between strategy organizational capabilities, between strategy and reward
structure between strategy and internal support system, and between strategy and the
organization culture.
The strategic implementing task is easily the most compacted and time-consuming part of
strategic management. It cut across virtually all facts of managing and must be initiated from
many points inside the organization. The strategy implementer’s agenda for action emerges
from careful assessment of what the organization must do differently and better to carry out
the strategic plan proficiently. Each manager has to think how much internal practices deviate
from what the strategy requires and how well strategy and organizational culture already
match.
As needed changes and identified, management must supervise all the details of
implementation and apply enough pressure on the organization to convert objectives into
results. Depending on the amount of internal change involved, full implementation can take
several months to several years.
WHY STRATEGIC MANAGEMENT IS AN ONGOING PROCESS
Because each one of the five tasks of strategic management requires constant evaluation and a
decision whether to continue or change, a manager cannot afford distraction. Nothing about the
strategic management process is final all prior actions are subject to modification as conditions
in the surrounding of environment change and ideas for improvement emerge, strategic

27 | P a g e
management is a process filled with motion. Changes in the organization situation, either from
the inside or outside or both, fuel the need for strategic adjustments.
The task of evaluating performance and initiating corrective adjustments is both the end and the
beginning of the strategic management cycle. The match of the external and internal events,
grant that revision in mission, objective, strategy and implementation will be needed sooner or
later. It is always incumbent on management to push for better performance to find ways to
improve the existing strategy and how it is being executed. Changing external conditions add
further impetus to the need for periodic revisions in a company’s mission. Performance
adjustment objective, strategy and approaches to strategy execution.
Adjustments usually involve fine-tuning. But occasions for major strategic re-orientation do arise
some time prompted by significance external development and sometimes by sharply sliding
financialperformance. Strategy managers must stay closeenough to the situation to detect when
changing conditions require a strategic response and when they don’t. It is their job to scene the
winds of change, recognize changes early, and initiate adjustments.
THE BENEFITS OF A “STRATEGY APPROACH” TO MANAGING
Today managers have to think strategically about their company’s position and impact of
changing conditions. They have to monitor the external; solution closely enough to know what
kind of strategic changes to initiate. Simply said, fundamentals of strategic management cede
to drive the whole approach to managing organizations.
The advantages of first-rate strategic thinking and conscious strategic management include:
1. Providing better guidance to the entire organization on the crucial point of “what it is
trying to do and to achieve.”
2. Making managers more alert to the winds of change, new opportunities and threatening
development.
3. Providing managers with a rationale for evaluating competing budget requests for
investment capital and new staff a rationale that argues strongly for steering resources
into strategy-supportive results producing areas.
4. Helping to unify the numerous related decisions by managers across the organization.
5. Creating a more proactive management posture and counteracting tendencies for
decisions to be reactive and defensive.

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SHELL OPERATIONAL STRATEGIES
Shell operate its site with a very efficient management to improve the quality and quantity of
fuel and provides the better customer satisfaction services. For this purpose shell follows its
strategic objectives, plans, and strategy and policies.
Following important aspect of Shell’s site control by the management with efficiently and
effectively:
 Site Take-over
 Product receipt procedure
 Bank accounts
 Indenting and Payment procedures
 Credit sales
 Product testing
 Imprested account operation
 Price change operation
 Wet stock management policy
1) SITE TAKE-OVER
PURPOSE
The purpose of this procedure is to ensure that when a site is taken over as a company
operation site (COP) the working capital taken over at the site is correctly valued. The step,
which should be taken on the “hand over day” i.e., the first day of site operations as a COS are
also outlined.
SCOPE
This procedure applies to existing dealer sites which are to be taken over as COS.
RESPONSIBILITY
The territory manager is responsible to ensure compliance with the procedure.
PROCEDURE AND STANDARDS
STOCK TAKING
At the time of site taken-over company follows the following procedure for stock taking:
The dealer agrees to a target date for handing over the site which is called that “hand over
date”. When taking-over the site, two options are available.
INITIAL WORKING CAPITAL
Working capital requirement at a site is determined keeping in view the sales of the site.
A copy of the invoice of the initial fill to be sent to RSO/2 for recording and the original is to be
retained at the site in a separate file.

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OUTSTANDING BILLS
All outstanding bills for utilities etc. incurred by the site before the handover date have to pay
by the dealer. Any outstanding amount should be mentioned in the site take-over note and
recovered from the out-going dealer.
2) PRODUCT RECEIPTPROCEDURE
PURPOSE
To ensure that the quantity and specifications of the received product match with that ordered.
SCOPE
This procedure applies to all company operated sites for the receipt of all products and applies
to of wet Stock as well as packed lubricants.
RESPONSIBILITY
The site manager is responsible to ensure compliance with the procedure.
Fuels
The site manger should be present at the site during the decantation of the product.
Before decantation the site manager should tally the product specification with the grade
ordered. All seals should be checked for integrity and numbers matched with those on the
invoice.
Lubes
At the time of receipt of lubes, the site manager should check the quantity and specification
mentioned on the invoice with that of the indent placed.
It should be made sure that the product received is not damaged or leaking.
3) BANK ACCOUNTS
In case of authorized bank signatories. The name of the Site manager may be included in
operating deposit account. However, site mangers are not authorized signatory to operate
Imprest account.
4) INDNTING AND PAYMENT PROCEDURES
FUEL
After the initial fill, all products will be financed by the cash proceeds from the initial fill.
Payment of fuel made under following Process:
 The price for fuels is the indent price and invoices must be prepared on this basis.
 All supplies are to be made as per arrangement with the depot/installation (COD/DOD or
advance DD).
 Allcheques/DD’s must be made out for exactly the same amount as the invoice and drawn
in favors of shell Pakistan Ltd.

30 | P a g e
 Each cheques/DD must be handed over to the truck driver after noting the particulars of
the cheques/DD. All the copies of invoice site copy of the invoice to be retained on the
site and a file maintained.
Lubes
After the initial fill, all products will be financed by the cash proceeds from the initial fill.
Payment of fuel made under following Process:
 Indent should be placed on telephone at the nearest supply point.
 A cheque/DD for the exact value of the invoice should be drawn in favour of shell of
Pakistan Ltd.
 Details of cheque/DD number and date should be noted on the invoice when precut is
delivered at the site.
 Site of the company has a copy of the invoice, the site manger red band copy returned to
the truck driver on which all cheques details will have to be recorded.
5) CREDIT SALES
PURPOSE
Credit is extended to the customers in a manner that the exposure of the company is
minimized.
SCOPE
Applies to all company operational sites.
RESPONSIBILITY
It is the responsibility of the territory manager to ensure that all credit accounts are approved
by the regional manager.
Approval of the credit terms and operation lies with the regional manager of the
recommendation of the territory manager.
Maintenance of all the necessary credit customers and sales records in the responsibility of the
site manger under the supervision of the territory manager.
Account opening: -
All new credit accounts can only be opened with the approval of RRMs. The customer should
apply in writhing to RRM for opening a credit account with the site. The application should
contain the following basic details:
I. Customer name
II. Customer address
III. Number and type of vehicles etc.

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CREDIT LIMITS
I. In case of the default of payment by the customer the site will stop extending credit to
the customer.
II. The site will first try to recover the credit amount form the customer. In case the
customer does not pay the balance with in the month, the balance amount will be deducted
from the security deposit and the account will be closed.
III. The site will send a security deposit deduction note to specify the deduction of the
security deposit for a particular customer and send the amount to the site to balance off the
credit sales.
6) PRODUCT TESTING
PURPOSE
Tested product is authorized and is accounted for in daily stock. Product testing is a process of
taking fuel product from the nozzles for the purpose of testing that dispensers are dispensing
the right quantity of the product. Since this product is not considered as the sold product a
proper accounting process needs to be in place.
RESPONSIBILITY
It is the responsibility of the site manger to ensure that all the product testing is conducted in
his presence and that all the testing is properly authorized by the territory manager and in case
of testing due to QCU and maintenance staff. The signatures of the concerned staff are taken.
Testing may also be conducted by the weights and measures officials.
 To conduct ay testing of the product it is mandatory that the measuring cylinders kept at
the site should be vetted by the quality control unit.
 The amount of the product withdrawn from each nozzle is noted and after the completion
of testing the product if decanted in the tank.
 All the necessary testing should be conducted in the presence of the site manger.
 It is to be ensured by the site manger that the entire tested product is decanted back into
the respective tanks.
 The site is also supposed to enter the product testing amount in the SMS along with the
details o the date, amount of product from respective nozzles and testing conducting
authority.

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7) IMPREST ACCOUNT OPERATION
PURPOSE
To ensure that all Territory Managers and aware of the imprest account operating procedures.
This is one to ensure that the company exposure is reduced by using correct banking practices.
The Imprest Account procedures have been designed to ensure implementation of standards of
imprest operation outlined in Management Policies and Procedure Guide.
Scope
The procedure is applicable to imprest account operation and the reimbursements.
FREQUENCY
This procedure is to be followed whenever, the imprest account is operated and claims for
reimbursements are made.
RESPONSIBILITY
It is the responsibility of the Regional Manager and the Territory Manager to ensure that the
Imprest Account is operated and claims for reimbursements are made in accordance with the
requirements given in the procedures.
PROCEDURES AND STANDARDS
a) The imprest account should only be used to meet all the expenses of business nature such as
salaries housekeeping, bank charges, etc.
b) Imprest limits for sites are set by RSO on the recommendation of the concerned RRM. All the
operating expenses of the site are detailed in the imprest approval form and the total of all the
expenses makes up the imprest limit of the sale.
8) PRICE CHANGE PROCEDURE
PURPOSE
The purpose of this procedure is to ensure that the changes in the working capital status as a
result of the price change of the product are recorded and reported accurately.
SCOPE
This procedure applies to the change of prices for all grades of fuels and lubricants sold at the
site.
RESPONSIBILITY
It is the responsibility of the RRM to ensure that price change takes place at a COS in the
presence of a representative of shell Pakistan limited. It is the responsibility of the site manger
to ensure that he change in working capital value is reported correctly and accurately. The
territory manger is responsible for the verification of the accuracy of the above.
When the price is changed, the following procedure is to be applied at the COS:
The new prices are notified by RSO to FNC/12 supply points and regional offices to update their
record accordingly.

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Only the concerned territory manger is authorized to change thee prices on COS. At the time of
the price change, the sale is temporarily stopped.
The site manager and the territory manager representative must take a dip of the storage tank
and note the meter readings of all dispensing units jointly.
9) WETSTOCKMNAGEMENTPOLICY
Due to the very nature of petroleum, losses being one of their inherent characteristics play an
important role in the efficiency of petroleum business. The potential of cost saving by
improving the controls and reducing the losses is considerable.
A primary responsibility in the site operation is to ensure that the physical losses are kept at
minimum so that maximum, quantity of the product received is delivered to the customer.
MONITORING OF LOSSES
Loss of performance standards are normally assessed on historical basis by comparing monthly
results. Effective monitoring of losses can be achieved by following way:
 Accurate measurement and accounting for all the deliveries.
 Proper calibration of the tank Lorries, dispensers and storage tanks at retail site.
 Good product safety with low risk of undetected theft.
 Periodic physical measurement of the actual product stacks and comparison with the
corresponding book stock to access the losses for a given period.
 Assessment of the loss control performance against the targets. The targets will vary
according to the type of the product and equipment used.
 Random spot-checks to ensure compliance to procedures and performance of the
equipment.
FINANCIAL STRATEGIES OF SHELL
We are re-shaping Shell to create a world-class investment case for shareholders. This strategy
is underpinned by Shell’s outlook for the energy sector and substantial changes in the world
around us. The dynamics of rising global population and standards of living should continue to
drive demand growth for oil and gas for decades to come. At the same time, there is a
transition underway to a lower-carbon energy system; a world with increased customer choice;
higher energy price volatility; and, with the advent of low-cost shale reserves, a new dynamic in
value creation in oil and gas.
Against this backdrop, Shell has four distinct strategic ambitions:
 Creating a world-class investment case, by reshaping Shell to grow free cash flow per
share (FCF/share) and increase returns, all underpinned by a conservative financial
framework;

34 | P a g e
 To be more relevant in our industry, and to grow our value share – being a respected
voice in the energy industry and growing our market capitalization;
 Reducing our carbon intensity as part of the energy transition; and
 Shared value – making sure that Shell is a force for good in society.
It have defined our strategy to deliver against these long-term ambitions and believe that
success will lead to sustaining a world-class investment case.
Portfolio and priorities
Shell segment its portfolio into a number of strategic themes. They have strategies for each of
them, with tailored technology approaches, distinctive markets and financial targets. They
allocate capital to each of these strategic themes to drive an optimal cash flow and returns
profile in the company, over multiple timelines. When we set our plans and goals, we do so on
the basis of delivering sustained returns over decades, not just years.
Asset sales and disciplined capital investment are key elements of this strategy. Following the
acquisition of BG, we expect the pace of our asset sales to increase, with $30 billion of
divestments planned for 2016-18. Up to 10% of Shell’s oil and gas production is earmarked for
sale, including five to ten whole country positions and selected midstream and downstream
assets. This is a value driven – not a time driven – divestment programme, and an integral
element of Shell’s portfolio improvement plan.
Shell is planning to spend between $25 billion and $30 billion each year until 2020. We see
$30 billion as a ceiling, as we reduce debt following the BG deal and meet our goals for
shareholder distributions. The $25 billion level reflects the expenditure we believe we need to
maintain medium-term growth in the company; it can go below that level if oil prices warrant
that. The final outcome in any given year will be determined by the pace of development and
overall affordability considerations. For 2016, we expect to spend $29 billion or less.
Create a world-class investment case
Shell ambition:
 World-class investment case
 Relevant in our industry + growing market capitalization
 Reducing our carbon intensity
 Shared value

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Investment priorities
Cash engines: Today
 Funds dividends + balance sheet
 Competitive + resilient
 Strong, stable returns and free cash flow
Growth priorities: 2016+
 Cash engines 2020+
 Affordable growth in advantaged positions
 ROACE + free cash flow pathway
Future opportunities: 2020+
 Material value + upside
 Path to profitability
 Managed exposure
Shell have identified four levers to manage through the market down-cycle: divestments,
reduced capital investment and operating expenses, and delivering new projects that will add
significant cash flow.
 Following the acquisition of BG, we expect the pace of asset sales to increase with
$30 billion of divestments in 2016-18, including up to 10% of Shell’s oil and
gas production and exit from five to ten countries and selected midstream and
downstream assets. This is a value-driven – not a time-driven – divestment programme,
and an integral element of Shell’s portfolio improvement plan. We completed
$4.7 billion divestments of non-strategic assets in 2016 with further sales underway.
 We expect organic capital investment to be between $25 billion and $30 billion a year
until 2020. We see $30 billion as a ceiling, as we reduce debt following the BG
acquisition and meet our goals for shareholder distributions. The $25 billion level
reflects the expenditure we believe is needed to maintain medium-term growth for
Shell; we can go below that level if warranted by oil prices. The final outcome in any
given year will be determined by the pace of development and overall affordability
considerations. In 2017, we expect organic capital investment to be around $25 billion.
 The consolidation of BG resulted in an increase in operating expenses of $1 billion in
2016, to $42 billion. This also included redundancy and restructuring charges of
$1.9 billion and BG acquisition costs of $0.4 billion. The impact of the consolidation of
BG was offset by steps taken to reduce expenses, realizing synergies and follow-on
benefits from the acquisition. We plan to reduce our operating expenses further in
2017. We expect the combination with BG to generate pre-tax synergies of $4.5 billion

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in operating and exploration expenses in 2018, up from our earlier expectation of
$3.5 billion, with further upside potential.
 In 2016, Shell started up different project, it expect these projects to add more than 250
thousand barrels of oil equivalent per day to our production and 3.9 million tons of LNG
a year to our liquefaction capacity once fully ramped up. In addition, it took final
investment decisions on new petrochemicals investments in China and the USA. They
are being highly selective on new investment decisions and plan to continue this
approach throughout 2017.
Shell drive to create a world-class investment case means that, around the end of this decade,
we expect to deliver higher, more predictable returns and growing free cash flow. At the same
time, shell intend to reduce our debt, which has increased as a result of the acquisition of BG.
Subject to such progress and a recovery in oil prices, it intend to turn off our scrip dividend
programme and undertake a share buy-back programme of at least $25 billion in 2017-2020.
Around the end of the decade, firms’ cash engines should have a more stabilized portfolio. With
the main divestments and project ramp ups behind us, our growth priorities, chemicals and
deep water, should be delivering free cash flow. Shales and New Energies portfolios will be
ready for more substantial growth investments, if we decide to take such steps.
We see the potential for free cash flow, plus proceeds from sale of interests in Shell Midstream
Partners, L.P., to reach $20-$30 billion, with return on average capital employed of around 10%,
by around the end of the decade, assuming $60 oil prices (2016 real terms). This potential
represents a substantial transformation in the company over the next few years.
CHSPTER 5
PESTELANALYSIS: EXTERNALENVIRONMENT
For the analysis of external environment following are important factors (PEST):
 Political –legal forces
 Economic forces
 Socio cultural forces
 Technological forces
POLITICAL FORCES: -
In Pakistan there are rapid changes of Government since poison. Each government that came in
power condemned the planning work done by the precious government. The slow development
due to political instability but now the present government is very stable to grow because govt.
is providing incentives to different industries.
LEGAL FORCES: -
Legal component consists of legislation that has been passed. This component prescribes rules
or laws that all members of society must follow e.g. labour policy, employees’ social security
scheme 1965 Partnership Act 1932 company 1984.

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ECONOMIC FORCES: -
In Pakistan GNP is 5.41 and inflation rate is very high which is 12.7. The balance of payment
position in Pakistan is -3.5%. The employment rate is 34.94 million.
ECONOMIC OVERVIEW
Currency: Pakistani Rupee
Average Exchange Rate (20/1/02): U.S. $1 = 100.5 rupees
Major Trading Partners: United States, Japan, Germany, United Kingdom, and Saudi Arabia
Major Export Products: Raw cotton and textiles; rice; leather manufactures
Major Import Products: Petroleum; machinery and transport
SOCIO CULTURAL FORCES: -
In Pakistan population is increasing and social values are also changing so the demand of fuel
consumption is also increasing. People are coming from rural areas to cities and their life style
and values are also changing. They are using modern technology like care, motor cycle for
traveling.
Pakistan's attempt to raise the living standards of its citizens has meant that economic
development has largely taken precedence over environmental issues.
Unchecked use of hazardous chemicals, vehicle emissions, and industrial activity has
contributed to a number of environmental and health hazards, chief among them being water
pollution. Much of the country suffers from a lack of potable water due to industrial waste and
agricultural runoff that contaminates drinking water supplies. Poverty and high population
growth have aggravated, and to a certain extent, caused, these environmental problems.
TECHNOLOGICAL FORCES: -
Pakistan environment regarding the technology is not very advance due to the lack of
resources. Natural gas, because of its environmental qualities, efficiency, and technological
advances are going to play an increasingly important role in meeting demand for clean energy.
TASK ENVIRONMET
 Customer
 Supplier
 Labor component
 Competitors
 Government
CUSTOMER: -
Our customers are high class, low class and also middle class, because every class is used petrol
for consumption.
SUPPLIER: -
Our suppliers are Pakistan refinery, National refinery and Attock refinery and Dhodak refinery.
LABOUR COMPONENT: -
Labor is frequently available in Pakistan because of high unemployment rate. So skilled and
unskilled persons are available at lower wages rate.

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COMPETITORS: -
Major competitors of Shell are PSO with petrol pumps and Caltex with petrol pumps. But Shell
Pakistan Limited operates in the Petroleum refining sector. Shell Pakistan Limited also compete
with three other petroleum refiners in Asia
 Chennai Petroleum Corporation Limited
 National Refinery Limited
 Mangalore Ref & Petrochemicals Limited
INTERNAL ENVIRONMENT
 Organization Structure
 Organization Culture
ORGANIZATION STRUCTURE: -
 Shell is the largest multinational organization with many product lines. Employees tend
to be functional specialists organized according to market/product distinction.
 Shell Pakistan is divided into five functional areas i.e. Retail, Commercial, Operations,
Finance, and Human Resources.
 Management attempts to find synergy among divisional activities through the use of
committees and horizontal linkages.
 Decision of major impact result from strategic plans made by organizational
staff
ORGANIZATION CULTURE: -
 Quality is the key ingredient and commitment to quality is share by executives and workers.
 The organizational Culture of the Shell is based on commitment of the top management for
quality, employees, local community, innovation, and performance.
CHAPTER 6
SWOT ANALYSIS
Shell has the quality control and quantity control team visit and inspect the quality and quantity
of motor gasoline of their petrol pump regularly.

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STRENGTHS
 Shell confirms its position as a leader in the gas and power business with a deal to design
the world's first large scale Gas to Liquids plant.
 Shell is using effective means for the promotion of its products. It is heavily emphasizing
on advertisement and other promotional tactics.
 Shell provides in time deliver to their petrol pumps.
 The HRM policies of Shell are its strengths; its incentive based policies are motivating for
employees.
 The shell gives the proper attention to their customers.
 Shell has international standard petrol pump.
 Mobile training units’ side keeping staff up to date on a whole range of topic including
most important issues of health safety and environment.
 Shell has the heavy budget for the promotion activities.
 All tanker is fitted with special tamper-profit seals to ensure that only the highest quality
fuel is delivered to all company operation sites.
WEAKNESS
 They have no proper shades and sitting arrangements at the filling stations because
people who came for oil changing and car washing face difficulties in this regard.
 There is no proper drainage system at filling station.
 There is very little empowerment of employees.
 Shell has eight regional retail managers who are watching the activities of petrol pumps
in all over the Pakistan that is insufficient to handle the problems.
OPPORTUNITIES
 Shell has maintained a tradition of introducing new innovation as compare to its
competitors. The example being the mobile, training unit, quality and quantity unit, Mini-
market (select, Jet was (Rianbow), oil change. Lubricants (Rumila C.D.X,) Helix that is
opportunity for Shell to maintain these facilities.

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 People perceptions are changing and they prefer digital pumps. So they should renovate
their petrol pumps. Shell also has an opportunity to enter in the nice market.
 Shell has strong financialposition so it has opportunity to availanew market share in CNG
business.
 Shell is the market leader due to innovation so it can easily win the customer confidence.
THREATS
 The smuggling of petrol in Baluchistan form Iran is one of the great threats to the
company.
 The fake oil makes up a large share in the market, if such practices are not prohibited it
will create a disastrous effects on sale
 PSO is also servicing in profitable areas.
 Shell is charging few paisa more than their competitor. Shell is facing very stiff competition
to PSO and Caltex.
 Entrant of new companies in the refinery sector.
CONCLUSION
 Shell is a global group of energy and petrochemicals companies. Its products include oils,
fuels, and card services as well as exploration, production, and refining of petroleum
products .As like other organizations Shell has its own Mission, Vision, ways of carrying
out the all the marketing functions. It has its own structure and hierarchy as well as
leadership style. It functions as a complete organization having its braches worldwide
carrying out different strategies and techniques to reach its goals and mission.
 It has positioned well in customers mind and has created good brand image. All of its
marketing strategies are very effective and are helping Shell reach the heights. Shell
Pakistan has maintains its image in this fast moving world with its core values and giving
more importance to its customers. With the research and development that its
departments carry puts the results into time-to-time changes and innovations that lead
the organization to better performance and achievement of goals.

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FINDINGS
Shell is one of biggest multinational company dealing in Pakistan. As such there is no financial
problem facing by shell. By market development shell can cope with aggressive competitors. By
product development (CNG) Shell can decrease its dependence on particular supplier (Greave
Pakistan Ltd.).By market development the company can capture the market of CNG. Use of CNG
reduce the environmental pollution and save the consumption of fuel. Developing
market (establish new outlets and upgrade existing outlets) increase growth rate and market
share simultaneously.
To meet emerging demand, Shell and other companies are heavily involved in the planning and
development of key infrastructure projects. This infrastructure - which includes pipelines, LNG
import terminals, distribution systems, and power plants - will cost billions of dollars. . As
markets mature and liberalise, marketing and trading opportunities emerge. But these
opportunities require different capabilities for success.
Instead of billions of dollars for investment in capital-intensive infrastructure projects, these
markets require highly skilled human resources and balance sheets capable of supporting the
commercial risks and financial exposures. Shell’s most significant involvement in these areas is
through Coral in the Asia, and Shell Energy in Europe.
In summary, shell industry is facing a broad range of opportunities. The Shell long- term energy
scenarios indicate that demand for clean, efficient energy is going to grow. And, natural gas,
because of its environmental qualities, efficiency, and technological advances, is going to play
an increasingly important role.
But there will also be challenges - such as the attraction of the necessary human and financial
capital. Anti-globalization and supply security add to these challenges.
But, the global demand for more and cleaner energy goes on. And I believe our industry is well
positioned to meet the challenges along the way.

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RECOMMENDATION
 There should be proper shades and proper sitting arrangements at the filling stations
because people who come for oil changing and car washing face difficulties in this regard.
 Lubricants should be disposed in a proper way to protect the environment form being
polluted.
 Shell should provide small incentive to its customers.
 Schemes like “Buy 50 liters of super and get a come free or a cola drink free”, should be
kept introducing time to time by shell.
 Shell should make company operation site in every city for capture the new market.
 There is only one thing that is constant that is change;shellshould investment on research
development to cope with dynamic environment.
 Company should established new regional office to control the activities of company
operations site.
 Lubricants should provide the facility 0f free oil change on all its out lets.
 Shell should develop modern retail outlet. These outlets should have all possible facilities
for customers because one of the reasons behind decreasemarket shareis modernization
of competitors.
 Shell should develop effective marketing programs that will help the company increase
sales that will lead to increase market share. In these market programs emphasis should
be given to advertising, which is most effective and efficient tool of promotion for such
type of business.

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References
 http://shell.com
 http://wiki.answers.com
 http://Slideshare.com
 http://en.academic.com
 http://thefreedictionary.com
 http://scribd.com
 http://wikipedia.com
 http://soopertutorials.com

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