PACRA Maintain Entity Ratings of My Petroleum (Pvt.) Limited

Pakistan's energy sector remains heavily reliant on imports. In FY25, the country's petroleum product consumption increased by ~7% YoY, reaching ~16.3mln metric tonnes (MMT) compared to ~15.3 MMT in FY24. This growth was largely driven by a rise in motor vehicle sales. Motor Spirit (MS) continued to lead in volume with sales of ~7.6 MMT (FY24: ~7.14 MMT), followed by High-Speed Diesel (HSD) at ~6.89 MMT (FY24: ~6.26 MMT). In contrast, Furnace Oil (FO) consumption saw a significant decline of ~23%, dropping from ~1.04 MMT to ~0.81 MMT. It's expected that the recent floods will impact the overall demand of the sector, impacting its cash flows and liquidity. Maintaining stable liquidity requires vigilance.
My Petroleum (Pvt.) Ltd.'s ('My Petroleum' or 'the Company') assigned ratings are largely supported by its sponsors' established presence in the oil marketing sectors. Despite expanding its retail network to 81 fuel stations, the Company maintains a minimal market share of ~0.4%. Revenue generation is primarily from the sale of petroleum products, with PMG contributing ~85% and HSD ~14%, while HSFO and lubricants account for the rest. The Company's revenue has declined due to a ~19% drop in sales volume, specifically from lower HSD sales. However, margins have improved, as the Company successfully procured petroleum products at lower prices. As the Company relies heavily on imports, My Petroleum is exposed to significant exchange rate risk. This exposure has negatively impacted profitability and heightened the Company's overall business risk profile. The financial risk profile remains adequate. The working capital is managed through a combination of debt and supplier credit. Although leverage remains stretched, coverage ratios have shown a slight improvement. The Company's balance sheet holds a weak borrowing cushion. Management aims to align leverage indicators with the Company's overall risk profile. Strong financial flexibility, demonstrated support from the sponsors as a subordinated loan, bodes well for the Company.
The rating captures the Company’s ability to sustain its business operations. The rating particularly recognizes ongoing developments - equity injection and expansion of the retail network. Sustainable profits and other key financial metrics, in terms of working capital and coverages, remain crucial to the rating.

About the Entity
My Petroleum (Pvt.) Ltd ('My Petroleum' or 'the Company') was incorporated in Jan-16 and became commercially operational in Sep-19. The Company is engaged in the procurement, import, storage, distribution, and marketing of POL products and lubricants. It is operating all over Punjab and some areas of Sindh with a total storage capacity of ~5,500MT, located at Habibabad and Mirpurkhas.
My Petroleum is a family-owned business with a major stake held by Mr. Tariq Wazir Ali (~95.3%) and his wife (~4.6%). The Company has a family-dominated Board, chaired by Mr. Tariq Wazir Ali. He is also the CEO of the Company and is aided by experienced professionals.