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The Pakistan Credit Rating Agency Limited
Press Release

Date
28-Aug-18

Analyst
Hamza Ghalib
hamza.ghalib@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Entity Ratings of BE Energy Limited ( formerly Bakri Energy Limited )

Rating Type Entity
Current
(28-Aug-18 )
Previous
(15-Feb-18 )
Action Maintain Initial
Long Term A+ A+
Short Term A1+ A1+
Outlook Stable Stable
Rating Watch - -

The ratings reflect BE Energy Limited (formerly Bakri 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 ~308 retail outlets. BE Energy capitalizes on second largest oil storage infrastructure of over 180,000 MTs spread across three terminals located at Port Qasim, Machike, Shikarpur, and one depot at Daulatpur. 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% : 35% : 20%). It has been successful in managing the impact of the reduction in demand of 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 healthy financial risk profile with strong coverage indicators and low leveraging. Currently, the company has no long-term debt whereas short-term borrowing needs emanate from working capital management. Given its plans, the debt level would go up 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. Additionally, with the new debt to be acquired, 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 Investment LLC (~99.97%) based in UAE, while its shareholding 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 four experienced professionals. Two members are from Bakri family while others are group executives. Both of the sponsor 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.