PACRA Maintains Entity Ratings of Gas & Oil Pakistan Limited
The ratings incorporate Gas & Oil Pakistan Limited (GO), strong presence in the oil marketing segment. The Company has augmented its market share in a competitive market, benefiting from the strategic positioning of the stations that it feeds. GO aims to carry out its expansion strategy by further penetrating the retail segment of semi-urban and rural areas, for that purpose the Company has issued Privately Placed Sukuk of PKR 2.5bln. The Company has increased its storage capacity, consolidated from 197,038 MTs to 205,200 MTs out of which 36,300 MTs storage is leased from Fauji Trans Terminal Limited (FTTL). This complements GO’s plans to keep the pace of growth with the augmented storage capacity. The further expansion is on the cards. GO further aims to inaugurate more company-owned and operated sites (COCOs), with an aim to enhance the margins. GO has traditionally capitalized on strong managerial, support from its sponsors who have significant knowledge in oil procurement and distribution. The equity base of the Company has taken support from internal capital generation and higher accumulated profitability. The management intends to keep the leverage indicators aligned to its risk profile. Moving forward, GO aims to diversify its revenue streams, strengthening its business risk profile. The governance framework of the Company is flanked by a diversified and experienced board.
The rating captures the Company’s ability to sustain its business operations while enduring its expansionary business plan. The rollout of the planned business strategy and sustainable profitability is essential. In the meantime, financial metrics need to be upheld in terms of working capital ratios, coverages and capital structure.
Gas & Oil Pakistan Limited incorporated in 2012, was granted the license as an OMC in 2012. Gas & Oil started its operation in 2014 in the 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 approximately 950 retail outlets, GO has ~ 9.42% market share as of Dec'21 based on the basis of MS/HOBC/HSD sales. The Company has a storage infrastructure of over 205,200 MT spread all across the country spread along with seven sites.
The majority shareholding of the Company is owned by three individuals. Mr. Khalid Riaz (CEO and Chairman) has a 58% stake in the Company followed by Mr. Shahzad Mubeen (21%), Mr. Bilal Ansari (11%), and VITOL Dubai Limited (10%). The Board of Directors comprises a total of nine experienced professionals, four members are representatives of GO. The other five members, including one female director, are serving as independent directors.