PARCO Gunvor Limited

RATING REPORT | Dec-25

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
17-Dec-25 AAA A1+ Stable Maintain -
20-Dec-24 AAA A1+ Stable Maintain YES
22-Dec-23 AAA A1+ Stable Maintain -
23-Dec-22 AAA A1+ Stable Initial -
About the Entity

PARCO Gunvor Limited ('PGL' or 'the Company') is an unlisted public limited company. The principal activity of the Company is the marketing and sale of petroleum products. The Company's shareholding resides equally (i.e., ~50% each) between the Gunvor Group (Gunvor), through its subsidiary, Aquashore SA - headquartered in Geneva, and the Pak Arab Refinery Limited (PARCO). The Company has a six-member Board. Three members represent PARCO, while three are nominated by Gunvor. The Board's Chairman, Mr. Momin Agha, represents the Ministry of Energy - Petroleum Division, and is nominated by PARCO. Mr. Asif Iqbal heads the Company as the CEO. Mr. Asif holds more than two decades of overall experience in retail management, oil distribution and marketing, supply chain, and operations. Other members of the management are also seasoned professionals.

Rating Rationale

PARCO Gunvor Limited (PGL)'s ('PGL' or 'the Company') assigned ratings hold association with its financially robust and stable sponsors, who maintain a significant presence across the global energy supply chain. PGL retains its distinctive position as the largest international Oil Marketing Company (OMC) operating in Pakistan. This, combined with its sustained market share among the top five local OMCs, strategically positions the Company to support regulatory efforts that influence the overall structural dynamics of the downstream energy sector. Overall, the Company's business and financial risks are well-managed, supported by sustainable topline revenue and profitability. The strategic decision to retain profits over an extended period has further solidified the Company's comprehensive financial footing. Volumetric sales gained momentum during 9MCY25, increasing by ~1.5% to reach 1.3mln MT. This growth was primarily fueled by significant increases in Excellium/HOBC (~137%) and special fluids (~135%). Modest improvements were also observed in SKO (~26%), lubricants (~11%), and HSD (~9.5%). However, this positive trajectory was partially mitigated by declines in the sales volume of bitumen (~59%), HFO (~57%), and MS (~0.18%). Despite the regulated pricing structure for POL products, the Company consistently demonstrates an ability to deliver strong financial performance. PGL's marketing and operations generate fairly stable cash flows, adeptly managing the inherent volatility in international oil prices and other persistent sectoral risks. The Company holds a strategic emphasis on a well-constructed and customer-centric approach. Furthermore, the Company's operations align with the shareholders' contemporary vision regarding the global energy transition, a perspective that is expected to shape new dynamics for both the Pakistani OMC sector and PGL moving forward.

Key Rating Drivers

The ratings are driven by the Company's preserved financial metrics. Moreover, strategic initiatives including sustainable development goals benefits the ratings. This along with sound governance framework and control environment are in compliance with the overall operations. However, timely materialization of said acquisition is imperative.

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

PARCO Gunvor Limited

rating analysis

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Profile
Legal Structure

PARCO Gunvor Limited (PGL) ('PGL' or 'the Company') was incorporated as an unlisted public limited company in Nov-20 under the replead Companies Ordinance, 1984 (now called Companies Act, 2017


Background

In 1997, TotalEnergies Marketing and Services (TMS), a French petroleum company, entered into a joint venture (JV) with Atlas Group to form Total Atlas Lubricants Pakistan (Pvt.) Ltd. (Total Atlas) to capture the local lubricant market. In 2000, TMS conceived another opportunity through a JV with Pak Arab Refinery Limited (PARCO) to enter Pakistan's OMC market and set up Total PARCO, which became commercially operational in Aug-01. Later, TMS acquired a ~100% stake in Total Atlas; while Total PARCO captured Chevron's local retail business. During Jan-15, the lubes and OMC businesses were merged providing PGL a bigger product pallate. Gunvor Group (Gunvor) a global commodity trading company, had acquired the entire TMS stake (i.e. ~50%) in the Company as of Dec-2024.


Operations

PGL is primarily engaged in marketing and selling petroleum products (PoL) along with manufacturing and selling lubes. Currently, the Company operates a retail network of ~828 stations, including ~10 company-operated sites. The Company holds total storage capacity of 92,355 MT, with its largest facility being the Keamari Terminal, which has a capacity of 30,655 MT With access to a contracted fleet of over ~550 tankers, the Company relies on the White Oil pipeline and the Mahmoodkot-Faisalabad-Machike (MFM) pipeline to transfer PoL products across Pakistan. The registered office is located in Lahore.


Ownership
Ownership Structure

Initially, the Company was a JV between TMS and PARCO, each holding ~50% stake. However, lately, the entire stake of TMS (~50%) has been acquired by Gunvor, through Aquashore SA, after completing all the necessary approvals from relevant authorities.


Stability

PARCO is a government-owned refinery, while TMS was a French oil company that holds an operational history of over 100 years. Lately, the Competition Commission of Pakistan (CCP) has approved the strategic acquisition of TMS stake (i.e.~50%) by Aquashore SA, a subsidiary of Gunvor, headquartered in Geneva, Switzerland.


Business Acumen

The JV partners have extensive experience in oil & lubricant trading along with the distribution & transportation of PoL products to OMCs across Pakistan and on global platforms. PARCO is among the largest refineries operating in Pakistan. Gunvor Group is a renowned and well-positioned global commodity trader holding networks across upstream and downstream channels.


Financial Strength

PARCO, AAA rated by PACRA, holds an equity base of ~PKR 133bln as of 9MCY25. Gunvor holds considerable financial footing, generating a turnover of ~USD 136bln and Equity base of ~USD 6.5bln as of 2024, provides a comfortable financial strength to the Company.


Governance
Board Structure

Overall control of the Company vests with a six-member Board (BoD), comprising three nominee Directors from each JV partner, i.e. PARCO and Gunvor. The composition ensures significant independence in the BoDs decision-making process.


Members’ Profile

Mr. Momin Agha, nominee Director by PARCO, has been chairing the Board since Aug-23 with an overall professional experience of around three decades. Currently, he is the Secretary of the Petroleum Division and chairs PARCO's board as well. Lately, Gunvor has nominated Mr. Patrcik Martin and Mr. Shahb Ricyal as Directors for PGL's BoD. Mr. Shahb Richyal serves as the Global Head of Portfolio at Gunvor Group and Mr. Patrick Martin is the Managing Director of Gunvor, Singapore. He has been with Gunvor since 2011, initially joining as the Head of Gasoline Trading in Singapore before progressing to his current leadership role.


Board Effectiveness

The BoD meets on a quarterly basis with complete attendance and comprehensive documentation of minutes. For operational efficacy, the BoD has established three committees, namely Finance, Audit, and HR and Remuneration Committee. The Committee meetings are held on a quarterly basis with adequate attendance and comprehensive documentation of meeting minutes.


Financial Transparency

The External Auditors of the Company, M/s. EY Ford Rhodes, has expressed an unqualified opinion on the financial statements for the period ended Dec-24. The firm is QCR-rated and listed on the SBPs pane


Management
Organizational Structure

The Company operates through nine departments - Finance, HR & Admin, Corporate Strategy & Compliance, HSSEQ, Lubricant & Marketing, Commercial, Retail Development, Operations and Retail. All departmental Heads, titled as VP, report to the CEO, who then reports to the BoD. While, the Head of Finance, Internal Audit & HR functionally reports to the respective BoD Committee, and administratively to the CEO.


Management Team

Mr. Asif Iqbal heads the Company as the CEO since Oct-23. Mr. Asif brings over three decades of professional experience in the energy sector and has served as the CEO and Country Chair at TotalEnergies, Vietnam. Lately, Mr. Fareed Pervaiz has been appointed as the CFO of the Company. He has been associated for seven years with the Company and holds professional experience of almost two decades. Previously, Mr. Mansoor Murad served as the CFO of the Company. The management team comprises seasoned professionals, each bringing a range of expertise in their respective fields.


Effectiveness

The management decision-making process is currently facilitated by a Management Committee (ManCom), comprising all departmental Heads - VPs - that meets weekly to discuss pertinent matters and evaluate strategies. Minutes of the each meeting are documented comprehensively. Anticipating the need for enhanced management efficacy, as Gunvor joins in, management-level committees may add-in.


MIS

The Company’s operating environment relies on an IT infrastructure supported by SAP solutions that generates reports including general ledger, sales & purchase, inventory control, carriage & freight, etc., except for the HR module. The IT infrastructure, including KissFlow software, is effectively integrated with all the departments and ensures proper financial and operational control.


Control Environment

PGL operates an in-house internal audit department to oversee risk management, control, and governance processes. This ultimately enhances business practices by establishing standard operating procedures (SOPs).


Business Risk
Industry Dynamics

Driven by its high reliance on imports, Pakistan's petroleum consumption grew ~6% YoY in FY25, hitting 16.7mln MT. This surge was primarily due to price reductions, reduced oil smuggling, and increased vehicle sales. Motor Spirit (MS) led sales at 7.6mln MT (~6% increase), with High-Speed Diesel (HSD) seeing the largest jump at 6.89mln MT (~10% increase). Conversely, Furnace Oil (FO) use sharply declined by ~28%. The market features 35 registered Oil Marketing Companies (OMCs), including the five key players, including PSO, WEPL, HASCOL, Gas & Oil Pakistan (GO), and Attock Petroleum Ltd. The upward consumption trend is forecast to continue.


Relative Position

PGL holds the third-highest market share in the OMC sector after PSO & GO. The Company captures ~12% and ~9.6% market share based on the sale of MS and HSD, respectively. 


Revenues

The Company has demonstrated substantial revenue growth in recent years. During 6MCY25, revenue stood at PKR 282bln, reflecting a ~3.24% decline year-on-year. The Company sold ~885,912 MT in volume, marking a marginal ~1.01% decrease. The decline in revenue despite higher volumes can be attributed to a decrease in MS and HSD prices. In terms of volume, MS accounted for around ~53% of total sales, while HSD, Excellium/HOBC, and HFO contributed ~37%, ~3%, and ~3% share, respectively. SKO and LDO collectively represented less than ~1% of total sales volume. During 9MCY25, PGL sold about 1,308,203 MT of POL. Following Gunvor's joining, the revenue stream is expected to remain sustainable while enhancing operational efficiencies.



Margins

The Company’s gross margin improved to ~4.8% during 6MCY25, compared to ~3.7% in 6MCY24, primarily driven by a decline in the cost of goods sold relative to sales. This indicates better cost efficiency and inventory management amid a challenging pricing environment. For 9MCY25, the gross margin stood at ~5%, with sales recorded at PKR 427bln, reflecting sustained operational strength. Net margin during 6MCY25 rose to ~1%, up from ~0.6% in the same period last year, highlighting improved bottom-line performance despite softer revenues. Looking ahead, margins are expected to remain sustainable.




Sustainability

The Company holds a customer-centric strategy with a contemporary vision well-aligned with Gunvor, which is a well-positioned global trader in the energy sector, managing investments in the upstream, midstream, and downstream operations, along with energy transition. This strategic introduction will keep the Company's supply chain and overall financial health intact. Going forward, the Company's revenue are expected to grow as depicted by an uptick in volumes. Similarly, profitability will also improve, while margins are expected to remain sustainable. Overall, the Company's performance is anticipated to improve. This bodes well for the Company. 


Financial Risk
Working capital

PGL manages a robust working capital cycle. The Company's net working capital (average days) improved significantly to 8 days in 6MCY25, compared to 11 days in 6MCY24. This improvement indicates that the Company has strengthened its working capital management, primarily through tighter inventory control and efficient receivables collection. Average inventory days stood at 26 days in 6MCY25, reflecting enhanced efficiency in converting inventory into cash. The Company holds a borrowing cushion as per the industry's norms. Going forward, working capital management is anticipated to improve.


Coverages

FCFO for the Company in 6MCY25 was PKR 5,490mln from PKR 3,051mln in 6MCY24, a significant increase of ~78%. FCFO for 9MCY25 was PKR9,483mln. Coverage for 6MCY25 was 122.8x in comparison to 4.8x in 6MCY24, depicting a robust ability of the Company’s to service the debt. The Company has managed its debt cover considerably well. Going forward, improvements in coverages are anticipated supported by lower interest rates resulting in reduced finance costs.


Capitalization

In 6MCY25, equity base for PGL was PKR 23.7bln in comparison to PKR 22.4bln in 6MCY24, an uptake of ~6%. The paid up capital for the Company remained stable at PKR 1,454mln. As of 9MCY25, equity for the Company stands at ~PKR 26bln. PGL's total borrowings in  6MCY25 were ~PKR 17bln, an ~18% uptake, leading to the Company's leverage standing at ~41.8% from ~39.2% in 6MCY24. Short-term borrowings made up about ~62% of the total borrowing during the same period. The Company saw a decline in its leverage in 9MCY25, as it reduced leverage levels to ~25%, as total borrowing during the period were reported at ~PKR 8,639mln. Going forward, the Company's capital structure is expected to remain strong.
 
 

Dec-25

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PARCO Gunvor Limited

financial summary

(PKR mln)

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Jun-25
6M		 Dec-24
12M		 Dec-23
12M		 Dec-22
12M
A. BALANCE SHEET
1. Non-Current Assets 29,507 28,485 26,505 23,567
2. Investments 0 0 0 0
3. Related Party Exposure 0 0 0 0
4. Current Assets 57,581 64,395 56,614 60,437
a. Inventories 40,361 40,161 42,833 48,618
b. Trade Receivables 9,411 9,017 7,481 6,451
5. Total Assets 87,088 92,880 83,120 84,004
6. Current Liabilities 44,480 55,086 48,766 40,010
a. Trade Payables 31,589 41,939 33,249 30,002
7. Borrowings 17,041 9,621 7,799 21,329
8. Related Party Exposure 0 0 0 0
9. Non-Current Liabilities 1,845 1,841 1,538 1,232
10. Net Assets 23,722 26,332 25,016 21,433
11. Shareholders' Equity 23,722 26,332 25,016 21,433
B. INCOME STATEMENT
1. Sales 282,374 573,390 589,778 479,212
a. Cost of Good Sold (268,802) (552,999) (561,890) (448,799)
2. Gross Profit 13,572 20,391 27,889 30,413
a. Operating Expenses (5,379) (10,185) (9,178) (8,029)
3. Operating Profit 8,193 10,206 18,711 22,384
a. Non Operating Income or (Expense) (1,004) 751 (3,250) (5,441)
4. Profit or (Loss) before Interest and Tax 7,189 10,957 15,461 16,944
a. Total Finance Cost (45) (1,817) (2,434) (2,044)
b. Taxation (4,268) (3,668) (4,744) (2,316)
6. Net Income Or (Loss) 2,876 5,471 8,282 12,584
C. CASH FLOW STATEMENT
a. Free Cash Flows from Operations (FCFO) 5,490 9,850 14,422 17,663
b. Net Cash from Operating Activities before Working Capital Changes 5,872 8,475 12,635 16,150
c. Changes in Working Capital (13,800) 8,852 10,134 (21,714)
1. Net Cash provided by Operating Activities (7,928) 17,327 22,769 (5,565)
2. Net Cash (Used in) or Available From Investing Activities (2,428) (3,183) (3,797) (2,714)
3. Net Cash (Used in) or Available From Financing Activities 1,507 (7,603) (13,578) 1,019
4. Net Cash generated or (Used) during the period (8,849) 6,541 5,394 (7,260)
D. RATIO ANALYSIS
1. Performance
a. Sales Growth (for the period) -1.5% -2.8% 23.1% 78.8%
b. Gross Profit Margin 4.8% 3.6% 4.7% 6.3%
c. Net Profit Margin 1.0% 1.0% 1.4% 2.6%
d. Cash Conversion Efficiency (FCFO adjusted for Working Capital/Sales) -2.9% 3.3% 4.2% -0.8%
e. Return on Equity [ Net Profit Margin * Asset Turnover * (Total Assets/Shareholders' Equity )] 23.0% 21.3% 35.7% 78.4%
2. Working Capital Management
a. Gross Working Capital (Average Days) 32 32 33 34
b. Net Working Capital (Average Days) 8 8 13 11
c. Current Ratio (Current Assets / Current Liabilities) 1.3 1.2 1.2 1.5
3. Coverages
a. EBITDA / Finance Cost 218.0 7.6 7.5 10.0
b. FCFO / Finance Cost+CMLTB+Excess STB 5.5 4.2 4.8 5.9
c. Debt Payback (Total Borrowings+Excess STB) / (FCFO-Finance Cost) 0.6 0.6 0.4 0.3
4. Capital Structure
a. Total Borrowings / (Total Borrowings+Shareholders' Equity) 41.8% 26.8% 23.8% 49.9%
b. Interest or Markup Payable (Days) 0.0 13.3 52.6 34.1
c. Entity Average Borrowing Rate 0.7% 16.3% 14.8% 11.3%

Dec-25

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PARCO Gunvor Limited

rating scale

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Dec-25

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PARCO Gunvor 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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Dec-25

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