The Pakistan Credit Rating Agency Limited
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Maryam Arshad

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PACRA Assigns Entity Ratings to Jinn Petroleum Limited

Rating Type Entity
(31-Mar-22 )
Action Initial
Long Term BBB
Short Term A2
Outlook Stable
Rating Watch -

The ratings incorporate Jinn Petroleum Limited, herein, referred to as Jinn, establishing its presence in the oil marketing (OMC) segment. The company is consistently progressing its medium term objectives to capture market share in already stable and competitive market, step on the strategic alliances with the largest operating local refineries to augment its distribution business. The growth binge is yet to be seen owing to defined laid down business plan. Jinn aims to carry out its expansion strategy by further expanding its retail network to all across Pakistan. The company has two storage capacities located in HUB & Sahiwal. In addition, hospitality arrangements with major companies at Kemari, Port Qasim, MehmoodKot, Machike and Gatti. This complements its tendency to capture the pace of growth as per planned. JINN's construction of storages in Daulatpur, Tarujabba and the extension in Sahiwal Depot are expected to be completed by the end of FY-23. Jinn has traditionally capitalized on strong managerial support from its sponsors and advisors who have significant ties with many bigger local players in oil procurement and distribution and knowledge of the local industry dynamics. The Company has primary reliance on local refineries; however, it fortifies the supply from import side wherein financial constraints are in play. The equity base of the company has taken support from internal capital generation and adequate sponsor’s financial profile. Currently, the sponsors' loan of PKR 397mln is on the books and is expected to be converted into the equity in addition to the present equity of the Company. The management intends to keep the leverage indicators aligned to its expansion plan. The company aims to further improve their revenue stream as it moves on its expansion drive, utilizing a mixture of internally generated equity and debt. Moving forward, JINN aims to diversify its distribution channels, strengthening its business risk profile.
The rating captures the company’s adequate ability to sustain its business operation while enduring its expansionary business plan. Rollout of the planned business strategy and sustainable profitability is essential. In the meantime, financial metrics needs to be upheld in terms of working capital ratios, coverages and capital structure.

About the Entity
JINN Petroleum (Pvt.) Limited is a “Private Limited” company incorporated in 2016. The sponsorship of the Company is channeled through Lala Energy DMCC 90% shareholding, rest of 10% are retained by several individuals. The Company is governed through a three-member board of directors, composing two executive and one non-executive director, depicting management concentration in the board. The management of the Company is governed by experienced industry experts under the chairmanship of Mr. Asad Azhar Siddiqui who possess over 44 years of oil industry experience.

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.