Analyst
Faraan Taimoor
faraan.taimoor@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
PACRA Maintains Entity Ratings of Gas & Oil Pakistan Limited
Rating Type | Entity | |
Current (29-Nov-19 ) |
Previous (31-May-19 ) |
|
Action | Maintain | Maintain |
Long Term | A | A |
Short Term | A1 | A1 |
Outlook | Positive | Positive |
Rating Watch | - | - |
The ratings incorporate Gas & Oil Pakistan Limited's growing presence in the oil marketing (OMC) segment. The company has attained a reasonable market share in a competitive market. It aims to carry out expansion strategy to further penetrate the retail segment by targeting semi-urban and rural areas. There was sizeable growth in the topline but the net profits have been limited due to exchange loss and high finance costs. Gas & Oil capitalizes on strong managerial support from its sponsors who have significant knowledge in oil procurement and distribution. The company’s working capital requirements have increased significantly, impacting company’s overall leveraging, while emanating the need for better working capital management. The management is working out different options to augment its equity base and uplift its stature in the domestic industry.
The positive outlook captures the company’s ability to sustain its business in light of slowdown in the economy along with pressure in the OMC sector. Rollout of the planned business strategy focusing augmented risk absorption capacity and sustainable profitability would be considered positive. In the meantime, financial matrix needs to be upheld.
About
the Entity
Gas & Oil Pakistan Limited incorporated in 2012, was granted the license as an OMC in 2012. Gas & Oil started its operation in 2014 in Punjab region and later expanded its sales and marketing network into Sindh in 2016, KPK in 2017 and also Balochistan in 2019. With a network of 484 retail outlets (end Sep-19), GO has a storage infrastructure of 130,160MTs spread all across the country.
The majority shareholding of the company is owned by three individuals. Mr. Khalid Riaz (CEO and Chairman) has 58% stake in the company followed Mr. Shahzad Mubeen (21%), Mr. Bilal Ansari (11%) and VITOL Dubai Limited (10%) stake in the company. The Board of Directors comprises nine experienced professionals with four independent members.