The Pakistan Credit Rating Agency Limited
31-Dec-18
Analyst
Faizan Arif
faizan.sufi@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
- Methodology | Corporate Ratings | Jun-18
- Methodology | Criteria | Rating Modifier | Jun-18
- Methodology | Correlation Between Long-Term And Short-Term Rating Scale | Jun-18
Related Research
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PACRA Assigns Positive Outlook to Entity Ratings of Gas & Oil Pakistan Limited
| Rating Type | Entity | |
|
Current (31-Dec-18 ) |
Previous (30-Jun-18 ) |
|
| Action | Maintain | Maintain |
| Long Term | A | A |
| Short Term | A1 | A1 |
| Outlook | Positive | Stable |
| Rating Watch | - | - |
The ratings incorporate Gas & Oil Pakistan Limited's (GO) growing presence in the oil marketing (OMC) segment. The company has attained ~3.4% market share in a competitive market over 4 years of operations and has 379 outlets. The company aims to carry on its expansion strategy to further penetrate the retail segment by targeting semi-urban and rural areas. The ratings drive strength from a well-structured organization and experienced management team. GO capitalizes on strong managerial support from its sponsors who have significant knowledge in oil procurement and distribution. The company is in the midst of large-scale capex programme to increase its storage capacity to support expansion initiatives. GO aims to finance the capex via debt, sale of an equity stake to a strategic investor and via IPO. During 9MCY18, GO's leveraging has increased significantly due to higher short-term borrowing. The company maintains strong coverage ratios though they have diluted on YoY basis. The company equity base has been strengthened with induction of VITOL in the shareholding. This also added to synergistic benefits with augmented supply chain.
The positive outlook captures the company’s augmented ability to expand its business in light of the fresh elevated strategy. Rollout of the planned business strategy with sustainable results is considered positive. In the meantime, financial matrix needs to be upheld.
About
the Entity
Gas & Oil Pakistan Limited incorporated in 2012, was granted the license as an OMC in 2012. GO started its operation in 2014 in Punjab region and later expanded its sales and marketing network into Sindh in 2016 and KPK in 2017. With a network of 379 retail outlets (May 18), GO has a storage infrastructure of 118,659MTs spread all across the country.
The majority shareholding of the company is owned by three individuals. Mr. Khalid Riaz (CEO and Chairman) has 58% stake in the company followed Mr. Shahzad Mubeen (21%), Mr. Bilal Ansari (11%) and VITOL Dubai Limited (10%) stake in the company. The Board of Directors comprises nine experienced professionals with four independent members.