The Pakistan Credit Rating Agency Limited
31-May-19
Analyst
Faizan Arif
faizan.sufi@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
- Methodology | Corporate Ratings | Jun-18
- Methodology | Criteria | Rating Modifier | Jun-18
- Methodology | Correlation Between Long-Term And Short-Term Rating Scale | Jun-18
Related Research
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PACRA Maintains Entity Ratings of Gas & Oil Pakistan Limited
| Rating Type | Entity | |
|
Current (31-May-19 ) |
Previous (31-Dec-18 ) |
|
| Action | Maintain | Maintain |
| Long Term | A | A |
| Short Term | A1 | A1 |
| Outlook | Positive | Positive |
| Rating Watch | - | - |
The ratings incorporate Gas & Oil Pakistan Limited's (Gas & Oil) growing presence in the oil marketing (OMC) segment. The company has attained ~4.8% market share during CY18 in a competitive market over five years of operations. The company aims to carry on its 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 were limited due to exchange loss. The ratings drive strength from a well-structured organization and experienced management team. Gas & Oil capitalizes on strong managerial support from its sponsors who have significant knowledge in oil procurement and distribution. The company is in the midst of large-scale capex programme to increase its storage capacity to support expansion initiatives. Gas & Oil aims to finance the capex via debt and sale of an equity stake to a strategic investor. During the review, in order to finance company’s working capital requirements company’s short term borrowings have increased significantly, impacting company’s overall leveraging, while emanating the need for better working capital management. The company maintains strong coverage ratios. The company equity base has been strengthened with induction of VITOL in the shareholding. This also added to synergistic benefits with augmented supply chain.
The positive outlook captures the company’s augmented ability to expand its business in light of the fresh elevated strategy. Rollout of the planned business strategy with sustainable results is 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 and KPK in 2017. With a network of 396 retail outlets (Dec 18), GO has a storage infrastructure of 117,490MTs 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.