PACRA Upgrades Entity Ratings of Flow Petroleum (Pvt.) Limited

Flow Petroleum (Pvt.) Limited ("Flow Petroleum" or "the Company") has evolved as an emerging player in the oil marketing companies (OMC) sector. The ratings reflect an improved business profile of the Company in line with the current dynamics of the petroleum industry. The Company demonstrates consistent progress toward market share expansion, supported by a network of 89 operational retail outlets. At present, the Company's storage facility at Faqirabad, with a capacity of 5,350 M.Ton, is opertaional and fully utilized. As a part of expansion strategy, the Company is working on two new storage facilities, at Daulatpur and Kohat, with an approx. storage capacity of 6,200MT each. Current available storage capacity is ~11,500MTs. The Company is eyeing on considerable hospitality income from Daulatpur's storage facility along with self-utilization. While, Kohat's storag facility is currently under construction. The Company's affiliation with Aslam Energy (Pvt.) Ltd., having presence in Pakistan's logistics sector, contributes positively to the overall operations. The Company has posted consistent improvement in performance. During FY23, revenue witnessed a substantial increase of ~206% (6MFY24: revenue growth is ~33%). This is primarily attributable to price adjustments alongside volumetric uptake. Flow Petroleum has made a strategic investment of ~25% in TransAsia Refinery Limited (TRL), while the remaining shares of the Refinery (TRL) are held by the Sponsors and affiliates (i.e., Aslam Energy (Pvt.) Ltd.). Once the Refinery (TRL) becomes fully operational, its expected to enhance Flow Petroleum's operational capabilities along with streamlining the supply chain challenges. However, transpiring the modalities of the transaction as per the pre-defined timeline remains imperative. On the financial risk front, the Company maintains strong coverages coupled with a stable working capital cycle. Capital structure remains robust, supported by a recent equity injection of PKR550mln. This kept the leveraging at an adequate level.
The ratings are dependent on Flow Petroleum’s ability to improve market penetration along with business margins. Successful and timely materializaton of the Company's strategic initiatives (retail expansion, making TRL opertional, and incorporating lubricants into the revenue stream) remains imperative to the ratings. Streamlining the governance framework remains crucial.

About the Entity
Flow Petroleum (Pvt.) Limited ('Flowr Petroleum' or 'the Company') was incorporated as a private limited company in 2017 under the repealed Companies Act'17. The Company is engaged in the procurement, storage, distribution, marketing, and import of petroleum products and lubricants. With a network of ~89 retail outlets, the Company holds ~1% of the market share in total sales and has a storage capacity of around 5,350 MT.
The Company's ownership vests with Mr. M. Waris (~51%) and Mr. M. Asif (~49%). Mr. M. Waris chairs the Board and heads the the Company as the CEO. He is assisted by a team of professionals.