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The Pakistan Credit Rating Agency Limited
Press Release

Date
05-Nov-18

Analyst
Muhammad Obaid
muhammad.obaid@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Entity Ratings of EGAS (Pvt.) Limited

Rating Type Entity
Current
(05-Nov-18)
Previous
(04-Apr-18)
Action Maintain Initial
Long Term BBB- BBB-
Short Term A3 A3
Outlook Stable Stable
Rating Watch - -

E-Gas (Pvt) Ltd (E-Gas) operates a unique business model of supplying CNG through a virtual pipeline. The ratings take comfort from the growing demand for gas amidst supply constraints. Overall the industry is dependent on the two major gas distribution companies and E-Gas through its virtual pipeline is capturing a small niche in that market. There is room available in this segment as the gas being distributed is a small fraction of what is being flared into the atmosphere. The demand from the customers is need-driven, which is perpetually increasing, as the energy starved industry doesn’t have access to uninterrupted supply or any other viable alternative. Success is pivotal on sound supply chain management and fulfilling the ever increasing demand through a well-managed fleet of logistical infrastructure. The sponsors have a good understanding of the business. The company’s profitability and leveraging is good. Improving working capital management and strengthening debt servicing capacity through improving cash position is pivotal for the ratings.
The ratings are dependent on sustaining a steady revenue stream and financial risk profile. The ratings would positively benefit from the corporate governance principles, internal control systems and financial strength of E-Gas. Any prolonged downturn in subdued business volume and low gas prices can have a detrimental effect.

About the Entity
E-Gas was incorporated in 2006 as a private limited company. The company started off by partnering with Fornovo Gas, an Italian equipment manufacturer, providing CNG equipment and services in Pakistan. Since 2011 E-Gas has shifted its focus to operating Virtual Gas pipeline, supplying CNG to different industries in Pakistan through their huge fleet of High Pressure Specialized Modules. E-Gas is owned and run by the sponsoring family. The sponsors also own a Honda car dealership in Rawalpindi. Mr. Yasir Raza is the CEO with his two brothers, Mr. Taimur Raza and Mr. Hassan Raza as executive directors.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.