The Pakistan Credit Rating Agency Limited
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Behrooz Fareed

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PACRA Maintains Entity Ratings of Flow Petroleum Private Limited

Rating Type Entity
(16-Jun-23 )
(17-Jun-22 )
Action Maintain Maintain
Long Term BBB+ BBB+
Short Term A2 A2
Outlook Stable Stable
Rating Watch - -

The ratings incorporate Flow Petroleum (Pvt) Ltd's (Flow Petroleum or the Company) 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. Flow Petroleum aims to carry out its expansion strategy by further expanding its retail network to all across Pakistan. The Company has storage facility at Fakirabad with a capacity of 5,350 M.Ton and is building two new storages at Daulatpur and Kohat. The Company has a network of 72 operational retail outlets. . This complements its strategy to capture the of growth as targeted. The equity base of the company has taken support from internal capital generation and adequate sponsor’s financial profile. During FY22, the Company witnessed magnanimous increase of ~262% in total revenue from the corresponding period last year and reached to PKR~15,882mln (FY21 PKR~4,386mln). The streak continued during 6MFY23, to register an increase of 72% and perched at PKR 27,248mln. This was due to increased sales quantum and record high prices of POL products. The Company has exhibited improvement in margins on the back of high petroleum prices, lower operational costs and reduced financial costs. The ratings reflect an improved business profile of the Company in line with current dynamics of petroleum industry. Despite increasing international POL prices, being an OMC, the Company is able to pass on the hike to consumer with commissioning of new outlets, leading to better revenues. Working capital cycle is stretched and leveraged ratio increased moderately. However, non-interest-bearing loan from related parties is convertible to equity. The Company has total debt of PKR~5,639mln and an equity of PKR ~2,288mln as at end-Dec22.
The ratings are dependent on Flow Petroleum’s ability to build market penetration, improved operational and net profit margins and Improvements in Corporate Governance Structure. Increasing number of retail outlets and storage capacity enhances confidence in Company's ability to sustain revenue growth and profit margins.

About the Entity
Flow Petroleum Private Limited was founded by a sponsors of Aslam Oil Traders, a leading firm in the energy sector of Pakistan in Feb 2017 under SECP having its registered office in Lahore, Pakistan. The Company is owned by two individual family members, Muhammad Waris (51%) and Muhammad Asif (49%). Primarily, it is engaged in the procurement, storage, distribution, marketing and import of petroleum products and lubricants. With a network of 72 retail outlets, Flow Petroleum has market share of ~1% as at FY22 based on the total sales. The Company is penetrating in the market in Punjab and Azad Kashmir but they have a plan to extend in other locations as well.

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.