The Pakistan Credit Rating Agency Limited
Press Release


Waqas Ahmad

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PACRA Assigns Initial Rating to Gas & Oil Pakistan Limited | PP Sukuk

Rating Type Debt Instrument
(04-Mar-22 )
Action Initial
Long Term AA-
Short Term -
Outlook Stable
Rating Watch -

The rating reflects strength of the security structure. This strength primarily derives from a two-tiered liquid support structure. The first is a Reserve Account, which caters for one installment kept in advance throughout the tenor of the instrument. The second is that Debt Payment Account will be funded one month before the installment getting due. The instrument has also been secured by conventional charges on assets. The rating incorporates every increasing presence in the oil marketing (OMC) segment of Gas & Oil Pakistan Limited, herein, referred to as GO. The Company has augmented its market share in a competitive market, benefiting from the strategic positioning of the stations that it feeds. The growth spree continues. GO aims to carry out its expansion strategy by further penetrating the retail segment of semi-urban and rural areas. The company has increased its storage capacity, consolidated from 130,160 MTs to 205,200 MTs including 36,300 MTs which is leased from Fauji Trans Terminal Limited (FTTL). This complements its tenacity to keep the pace of growth with this existing storage capacity. GO further aims to inaugurate more company owned and company operated sites, which will further 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. The company aims to further improve their market share as it moves on its expansion drive, utilizing a mixture of internally generated equity and debt.
The rating captures the company’s ability to sustain its business despite challenges arising from an outbreak of pandemic. 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.

About the Entity
Gas & Oil Pakistan Limited was incorporated and granted license as an OMC in 2012. Gas & Oil started its operation in 2015 in 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, Gas & Oil Pakistan has ~10% market share in terms of (Mogas/HSD/HOBC) as of June-21. The company has storage infrastructure of over 205,200 MT spread all across the country. The majority shareholding of the company is owned by three individuals. Mr. Khalid Riaz (CEO) 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 of nine experienced professionals, including six independent members.

About the Instrument
Gas & Oil Pakistan issued a rated, secured, privately placed sukuk in Dec-21, under chapter 5C PSX rule book. The issue amount of Sukuk is PKR 2.5bln at an offer rate of 3 Month KIBOR + 1.75% p.a with a tenor of five (5) years, inclusive of 1 year grace period. Sukuk’s redemption is scheduled in sixteen equal quarterly payments.

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.