PACRA Assigns Initial Entity Ratings to EGAS (Pvt.) Limited
EGas (Pvt) Ltd (EGas) 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 EGas 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 EGas. Any prolonged downturn in subdued business volume and low gas prices can have a detrimental effect.
EGas 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 EGas 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. EGas 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.