The Pakistan Credit Rating Agency Limited
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Mubasher Bhatti

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PACRA Maintains Entity Ratings of BE Energy Limited

Rating Type Entity
Action Maintain Maintain
Long Term A+ A+
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

The ratings reflect BE Energy Limited association with a strong sponsor - Saudi based Bakri Group. Over the years, BE Energy has managed to gain ~3% market share and has ~337 retail outlets. BE Energy capitalizes on second largest oil storage infrastructure of over 182,000 MTs spread across three terminals located at Port Qasim, Machike, Shikarpur, and one depot at Daulatpur. This has brought forth hospitality income for the company, which currently contributes sizeable chunk to the profitability. The company’s significant ongoing and expected investment in infrastructure (storage, supply chain, and retail outlets) will facilitate sustainable growth. The company has witnessed stable growth in revenues and also manages to diversify its product mix (HSD: PMG: FO –45%: 42% :13%). It has been successful in managing the impact of the reduction in demand for FO. BE Energy plans to focus on retail clients and enhance its supply chain infrastructure. To nurture its retail penetration the company is 1) rebranding its outlets on modern lines in a phased manner, 2) open new outlets along CPEC route and in the central parts of the country (mainly Punjab) where it has currently, low share, and 3) laying down supportive storage capabilities to ensure timely availability of its products. The rating is supported by a strong management structure reflected by three management committees in place to efficiently procure and deliver the product. BE Energy has adequate financial risk profile with moderate coverage indicators and leveraging. The company has a leveraged capital structure which mainly encompasses short-term borrowings whose needs emanate from working capital management. Given its plans, long-term debt may also increase but moderately.
In addition to the timely development of infrastructure and supply chain, the ratings are dependent on BE Energy's ability to build broad-based market penetration. The company needs to strengthen its relative positioning. Additionally, with the new debt to be acquired, the sustainability of coverages would remain important for the ratings.

About the Entity
BE Energy Limited incorporated in Pakistan and commenced its operations in 2007. BE Energy is owned by Rawafid Investments LLC (~90.97%) based in UAE and Energy Petroleum Consultant Company (9%) based in Kuwait. The shareholding of Rawafid Investments LLC lies with the members of Bakri family. Bakri group was founded in late 60's, the group provides aviation fuel services, shipping, time charter services, shipping management & marine support services in the middle east. Primarily, BE Energy is engaged in the procurement, storage, distribution, marketing and import of petroleum products and lubricants.

The board of BE Energy comprises five experienced professionals. Two members are from Bakri family, one is group executive and shareholder in Energy Petroleum Consultant Company while others are group executives. All the directors are actively involved in the oversight of the company. Mr. Hussain Al Shammaa is the CEO of the company. He has been involved in the oil business for the last 35 years and was previously associated with Kuwait Petroleum Company (KPC). The company has initiated plans to enhance its board to seven members while also adding independent 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.