Pakistan Oxygen Limited

CREDIT RATING REPORT | Jul-25

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
25-Jul-25 A+ A1 Stable Upgrade -
25-Jul-24 A A1 Stable Maintain -
25-Jul-23 A A1 Stable Maintain -
26-Jul-22 A A1 Stable Maintain -
29-Jul-21 A A1 Stable Maintain -
About the Entity

Pakistan Oxygen Limited, established in 1949 and publicly listed on the Pakistan Stock Exchange in 1958, is a prominent entity in the manufacturing of industrial and medical gases, welding electrodes, and the marketing of medical equipment. The Company operates across four key business segments: bulk gases, healthcare, packaged gas products (PGP), and tonnage. Mr. Siraj Dadabhoy is identified as the major beneficial shareholder. The Company's governance is overseen by a ten-member Board of Directors, which includes six non-executive directors and four independent directors. Mr. Waqar A. Malik serves as the Chairman of the Board, while Mr. Matin Amjad holds the position of Chief Executive Officer.

Rating Rationale

The ratings reflect the eminent position of Pakistan Oxygen Limited (“the Company” or “POL”) in the industrial & medical gases, welding, hard goods, and Medical Engineering Services (MES) segments. The Company maintains a leading footprint and broad customer outreach within Pakistan’s structured industrial and medical gases industry. In the electrodes segment, POL leads the Tier-I category while also maintaining a notable presence in the largely unorganized Tier-II and Tier-III markets. On the domestic front, total ASU production capacity stands around 1,500 TPD. The sector remains organized and concentrated, with Pakistan Oxygen Limited being one of the key players driving production capacity and market leadership. The demand for medical gases is intrinsically linked to improvements in healthcare infrastructure. This sector is currently benefiting from rapid urbanization and a general increase in health awareness. While, the demand for industrial gases is closely tied to the output of large-scale manufacturing (LSM). Despite favorable macroeconomic conditions in FY25, including exchange rate stability, a gradual decline in inflation, and policy rates, LSM showed mixed trends, contracting by ~1.21% in 11MFY25. While certain segments, such as garments, automobiles, textiles, petroleum products, tobacco, and pharmaceuticals, witnessed selective improvements, the broader LSM index was negatively impacted by reduced production in key industrial gas-consuming sectors like steel, fabricated metal, machinery, and electrical equipment. However, the management expects recovery in these segments in future. During CY24, the Company reported revenue of ~PKR 11.3bln, reflecting a growth of 32.1% compared to ~PKR 8.5bln in CY23. This increase was primarily driven by an effective pricing strategy, which translated into healthy margins across all levels. Energy costs constitute ~40% of the Company’s cost of goods sold (COGS), making elevated energy prices a continued challenge for the industry. In response, the Company commissioned a state-of-the-art European energy-efficient 270 TPD Air Separation Unit (ASU) to support future demand in the industrial and medical gases segments. The rating upgrade reflects a notable improvement in the profitability profile and growth trajectory, which are expected to be sustained, as evidenced by POL’s financial projections. POL benefits from a strong governance framework, supported by a skilled and experienced management team. The Company’s financial risk profile reflects a slightly stretched working capital cycle, though coverage metrics remain adequate. The capital structure is leveraged, primarily comprising long-term borrowings (TERF) undertaken to support capacity expansion BMR initiatives and short-term for working capital management. Going forward, POL is investing in expanding its hydrogen production by establishing a new hydrogen production facility at Port Qasim. The project is backed by a 15-year supply agreement with a leading specialty chemicals customer, further strengthening POL’s position in the hydrogen segment.

Key Rating Drivers

The ratings are dependent on the Company's ability to sustain its market share by effectively utilizing its production capacity. At the same time, sustainability in the growth trajectory and profitability matrix, along with prudent financial management and performance outlined in the latest projections will remain imperative.

REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

Pakistan Oxygen Limited

rating analysis

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Profile
Legal Structure

Pakistan Oxygen Limited, formerly Linde Pakistan Limited, (hereinafter referred to as ‘‘the Company’’ or ‘‘Pakistan Oxygen’’) was incorporated in 1949. The Company was listed on the Pakistan Stock Exchange in 1958.


Background

The Company was initially incorporated under the name of Pakistan Oxygen and Acetylene Company Limited but it was later renamed BOC Pakistan in 1995. In 2011, it was re-branded as Linde Pakistan before being named back to Pakistan Oxygen Limited earlier in 2018 after the acquisition of majority shareholdings of the Company by Adira Capital Holdings (Private) Limited and members from Hilton Pharma and others. 


Operations

The Company operates across four core business segments: Bulk Gases, Healthcare, Packaged Gas Products (PGP), and Tonnage. In addition, its Electrodes division contributes incremental value to the overall revenue stream. The Company currently owns and operates four Air Separation Units (ASUs) for the production of industrial gases. With the commissioning of a new plant having a capacity of ~270 TPD, the Company's total production capacity has increased to ~533 TPD.


Ownership
Ownership Structure

Adira Capital Holdings (Private) Limited, members of the Hilton Pharma family, Soorty Enterprises (Private) Limited, and Mr. Shahid Mahmood Umerani are the major shareholders of the Company, together holding ~ 77% of the total shareholding. Mr. Siraj Dadabhoy is the major beneficial shareholder.


Stability

Pakistan Oxygen is majorly-owned by a consortium of investors under a well-defined share purchase agreement. To support the Company’s long-term sustainability, the establishment of a clear succession plan can contribute significantly to business continuity and operational stability.


Business Acumen

Adira Capital Holdings (Private) Limited, the majority shareholder, is a semi-private equity company. The Company's Board Chairman, Mr. Waqar Ahmed Malik, brings over 39 years of leadership experience, having held prominent positions at Fauji Foundation, Mari Petroleum, Fauji Fertilizer Company (FFC), Fauji Fertilizer Bin Qasim Limited (FFBL), Fauji Cement, and Adira Capital Holdings.


Financial Strength

The sponsors comprise a consortium of commercially and industrially focused investors, including prominent business groups and corporate sector professionals, possessing adequate financial strength. At the time of Pakistan Oxygen’s acquisition in 2017, both the Hilton family and Soorty Enterprises (Private) Limited held substantial net assets.


Governance
Board Structure

There are ten members on the Board, out of which four are independent directors and six are non-executive directors including the chairman. Mr Waqar Ahmed Malik is the Chairman of the Board.


Members’ Profile

The Board of Directors comprises experienced non-executive and independent members who collectively bring extensive professional and financial expertise. The non-executive directors include Waqar Ahmed Malik, Chairman, with over 39 years of leadership experience and key roles at Fauji Foundation, Mari Petroleum, FFC, FFBL, Fauji Cement, and Adira Capital Holdings; Siraj Ahmed Dadabhoy, a Certified Public Accountant with over 39 years of experience; and Syed Hassan Ali Bukhari, a Chartered Accountant with more than 34 years of experience. Javed Kureishi, Shahid Mehmood Umerani, and Muhammad Iqbal Puri also serve as non-executive directors. The independent directors are Tushna D. Kandawalla, a Certified Public Accountant with over 30 years of experience; Tayyeb Afzal, a Chartered Accountant with more than 45 years of experience; Mr. Asad Said Jafar and Nadir Salar Qureshi, who brings a blend of technical and strategic expertise.


Board Effectiveness

Board meetings are held regularly with a high attendance of directors. An internal audit function is also in place, outsourced to M/s EY Ford Rhodes, Chartered Accountants, which is supervised by the Head of Internal Audit who reports to the Board Audit Committee. Four committees are also in place to assist the Board: i) Audit Committee, ii) HR Remuneration & Nomination Committee, iii) Share Transfer Committee, and iv) Board Strategy Committee.


Financial Transparency

BDO Ebrahim & Co. Chartered Accountants, with satisfactory QCR ratings and categorized 'A' in the list of SBP-approved auditors, are the Company's external auditors. For year-end-Dec'24, the firm expressed an unqualified opinion on the annual financial statements.


Management
Organizational Structure

The Company's organizational structure is divided into various functional departments and all the department heads report to the CEO. Within each department, the management hierarchy includes different cadres, enabling the Company to carry out smooth operations.


Management Team

The Company’s management team comprises qualified and experienced professionals with diverse skill sets and extensive industry exposure. Mr. Matin Amjad, the CEO, brings over two decades of multi-functional leadership experience across both multinational and local corporate environments. Mr. Jamshed Azhar, the CFO, has a professional career spanning more than 20 years, including ~7 years at Abbott Laboratories. The senior management team has been further strengthened through the induction of new heads across key functions, including sales, operations, distribution, planning, and finance.


Effectiveness

The functions of the management are clear and well-defined to achieve its underlying goals and objectives effectively. The system of internal control is in place and has been effectively implemented.


MIS

The Company has an established SAP version; ECC6.0, EHP-8 has modules for Sales (SD), Material Management (MM), Finance (FI), Plant Maintenance (PM), AXON, Procurement & Production Planning (PP).


Control Environment

The Company maintains a sound internal control system to reasonably assure the efficiency and effectiveness of operations. At the same time, the Board Audit Committee reviews the internal control system based on an assessment of risks and reports to the Board of Directors.


Business Risk
Industry Dynamics

The sector remains organized and concentrated, with Pakistan Oxygen Limited being one of the key players driving production capacity and market leadership. The demand for medical gases is intrinsically linked to improvements in healthcare infrastructure. This sector is currently benefiting from rapid urbanization and a general increase in health awareness. While, the demand for industrial gases is closely tied to the output of large-scale manufacturing (LSM). Despite favorable macroeconomic conditions in FY25, including exchange rate stability, a gradual decline in inflation, and policy rates, LSM showed mixed trends, contracting by ~1.21% in 11MFY25. While certain segments, such as garments, automobiles, textiles, petroleum products, tobacco, and pharmaceuticals, witnessed selective improvements, the broader LSM index was negatively impacted by reduced production in key industrial gas-consuming sectors like steel, fabricated metal, machinery, and electrical equipment.


Relative Position

Pakistan Oxygen Limited (POL) holds a leading position in the industrial and medical gases sector, commanding an estimated market share of approximately 40%. Ghani Chemical Industries Limited ranks second, with a market share of around 35%. POL's strong market presence is underpinned by its well-established footprint, diversified client portfolio, and nationwide operational reach. Other notable players in the industry include Multan Chemicals Limited (8%), Shareef Oxygen (5%), Agha Steel (5%), Sultan Oxygen, Karachi (2%), and Medigas (2%).


Revenues

The Company recorded revenue of ~PKR2.9bln in Mar’25, reflecting an ~8% increase compared to ~PKR2.7bln in Mar’24. This growth was primarily driven by an effective pricing strategy. For the full year ended Dec’24, revenue stood at ~PKR11.3bln, marking a~32% rise from ~PKR8.5bln in Dec’23. The gases segment remained the principal contributor to overall revenue, while the welding, hardgoods, and Medical Engineering Services (MES) segment continued to support diversification of the revenue base. The sustained growth trajectory underscores the Company’s resilience amid earlier macroeconomic headwinds that had weighed on industrial activity.


Margins

In Mar’25, the Company posted a gross profit margin of 33.8% and a net profit margin of 13.3%, reflecting a sustained improvement in profitability compared to 25.9% and 6.5%, respectively, in Mar’24. This enhancement was supported by improved operational efficiencies and a refined pricing strategy. Profitability also strengthened during CY24, with margins improving across all levels relative to CY23. The margin expansion is attributed to operational gains from the recently commissioned energy-efficient plant. 


Sustainability

Pakistan Oxygen is one of the largest manufacturers of industrial and medical gases in Pakistan. The company has commissioned a state-of-the-art plant with an approximate capacity of 270 TPD ASU, along with an 11 TPS electrode plant. These facilities, driven by world-class technology, offer cost-effectiveness and a competitive edge. The new plants have better specific power consumption, enhancing operational efficiency.


Financial Risk
Working capital

As of Mar’25, net working capital days increased to 88, up from 75 days in Mar’24. On a year-on-year basis, net working capital days stood at 87 in CY24, compared to 73 days in CY23. The increase reflects extended receivable cycles and higher inventory levels associated with expanded operations.


Coverages

During Mar’25, free cash flow from operations (FCFO) stood at ~PKR887mln, compared to ~PKR653mln in the same period last year. On a year-on-year basis, FCFO rose to ~PKR2,780mln in Dec’24, up from ~PKR1,277mln in Dec’23. This improvement in operating cash flows contributed to imporved coverage metrics during both Mar’25 and CY24. 


Capitalization

As of Mar’25, the Company’s long-term borrowings stood at ~PKR 3,646mln, compared to ~PKR 4,327mln in Mar’24 and ~PKR 3,899mln in Dec’24. Short-term borrowings were reported at ~PKR 1,972mln, bringing total borrowings to ~PKR 6,212mln in Mar’25 (Mar’24: ~PKR 7,496mln; Dec’24: ~PKR 6,460mln). The leverage ratio (Total Borrowings / Total Borrowings + Shareholders' Equity) stood at ~39% in Mar'25, down from ~46% in Mar’24 and ~41% in Dec’24.
 
 

Jul-25

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Pakistan Oxygen Limited

financial summary

(PKR mln)

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Mar-25
3M		 Dec-24
12M		 Dec-23
12M		 Dec-22
12M
A. BALANCE SHEET
1. Non-Current Assets 13,480 13,573 13,650 12,188
2. Investments 0 0 0 0
3. Related Party Exposure 0 0 0 0
4. Current Assets 5,570 5,513 5,002 5,243
a. Inventories 1,325 1,457 1,030 1,317
b. Trade Receivables 2,235 1,795 1,338 827
5. Total Assets 19,050 19,086 18,652 17,431
6. Current Liabilities 2,501 2,756 1,712 2,080
a. Trade Payables 304 604 297 770
7. Borrowings 6,212 6,460 7,910 7,155
8. Related Party Exposure 0 0 0 0
9. Non-Current Liabilities 600 524 390 431
10. Net Assets 9,738 9,346 8,639 7,764
11. Shareholders' Equity 9,738 9,346 8,639 7,764
B. INCOME STATEMENT
1. Sales 2,948 11,345 8,589 7,296
a. Cost of Good Sold (1,953) (8,285) (7,028) (5,972)
2. Gross Profit 996 3,060 1,561 1,324
a. Operating Expenses (165) (892) (688) (625)
3. Operating Profit 831 2,168 873 700
a. Non Operating Income or (Expense) (45) 8 19 (15)
4. Profit or (Loss) before Interest and Tax 786 2,176 892 684
a. Total Finance Cost (142) (999) (687) (209)
b. Taxation (253) (465) (61) (55)
6. Net Income Or (Loss) 391 712 145 420
C. CASH FLOW STATEMENT
a. Free Cash Flows from Operations (FCFO) 887 2,780 1,277 858
b. Net Cash from Operating Activities before Working Capital Changes 706 1,638 689 750
c. Changes in Working Capital (401) 563 (329) (758)
1. Net Cash provided by Operating Activities 305 2,200 360 (8)
2. Net Cash (Used in) or Available From Investing Activities (103) (574) (1,984) (4,131)
3. Net Cash (Used in) or Available From Financing Activities (233) (526) 1,030 3,173
4. Net Cash generated or (Used) during the period (31) 1,100 (594) 117
D. RATIO ANALYSIS
1. Performance
a. Sales Growth (for the period) 4.0% 32.1% 17.7% 4.2%
b. Gross Profit Margin 33.8% 27.0% 18.2% 18.2%
c. Net Profit Margin 13.3% 6.3% 1.7% 5.8%
d. Cash Conversion Efficiency (FCFO adjusted for Working Capital/Sales) 16.5% 29.5% 11.0% 1.4%
e. Return on Equity [ Net Profit Margin * Asset Turnover * (Total Assets/Shareholders' Equity )] 16.4% 7.9% 1.8% 6.6%
2. Working Capital Management
a. Gross Working Capital (Average Days) 105 101 96 96
b. Net Working Capital (Average Days) 88 87 73 69
c. Current Ratio (Current Assets / Current Liabilities) 2.2 2.0 2.9 2.5
3. Coverages
a. EBITDA / Finance Cost 6.9 2.9 2.1 5.2
b. FCFO / Finance Cost+CMLTB+Excess STB 3.1 1.8 1.2 1.8
c. Debt Payback (Total Borrowings+Excess STB) / (FCFO-Finance Cost) 1.4 2.5 8.0 7.0
4. Capital Structure
a. Total Borrowings / (Total Borrowings+Shareholders' Equity) 38.9% 40.9% 47.2% 47.7%
b. Interest or Markup Payable (Days) 99.1 62.5 168.9 392.9
c. Entity Average Borrowing Rate 8.2% 13.7% 8.8% 4.3%

Jul-25

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Pakistan Oxygen Limited

rating scale

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Jul-25

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Pakistan Oxygen Limited

regulatory disclosure

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  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
    2. Conflict of Interest
      1. The Rating Team or any of their family members have no interest in this rating (Chapter III; 12-2-(j))
      2. PACRA, the analysts involved in the rating process, and members of its rating committee and their family members do not have any conflict of interest relating to the rating done by them (Chapter III; 12-2-(e) & (k))
      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
      4. Explanation: for the purpose of the above clause, the term "family members" shall include only those family members who are dependent on the analyst and members of the rating committee.
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  3. Conduct of Business
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Jul-25

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