The Pakistan Credit Rating Agency Limited
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Ahsan Zahid

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PACRA Assigns Initial Entity Ratings to PARCO Pearl Gas (Pvt.) Limited

Rating Type Entity
(26-Jun-23 )
Action Initial
Long Term AA
Short Term A1+
Outlook Stable
Rating Watch -

PARCO Pearl Gas (Private) Limited (PPGL, the company), a wholly owned subsidiary of Pak Arab Refinery Limited, is the largest LPG Marketing companies of the Country. The Company has a strong presence in Pakistan’s LPG sector for over four decades. The Company is successfully marketing their product under brand names; Pearl Gas and Super Gas. The company has largest market share of ~12% and caters to market needs of all three segments; Domestic, Commercial & Industrial. The demand from the customers are need-driven, which perpetually increases, as the energy starved industry doesn’t have access to uninterrupted supply or any other viable alternatives. Success is pivotal on sound supply chain management through various LPG suppliers and fulfilling the ever-increasing demand through a well-managed fleet of logistical infrastructure. PPGL handles the volumes in excess of ~160,000 MT annually with 8 filling plants, 6 hospitalities and 5 gas distribution centers through their diversified presence at strategic locations in the Country with storage capacity of 3,575 MTons combined with the nation-wide network of 579 distributors and 1,162 B2B customers. The volumes of the Company are increasing over the period and during 9MFY23, the Company has witnessed the revenue growth of 41.6%. The Company is currently procuring major share of LPG from its parent company, direct inputs along with a few E&P companies. PPGL has a favorable capital structure with no debt on its balance sheet. In addition, to enhance business volumes company is aggressively working on new initiatives including integration of supply chain through terminal and pipeline network, the support will be mainly driven from the strengthened equity base (9MFY23: 2.7bln, FY22: PKR 1.9bln) and sound liquidity position, providing comfort to financial risk matrix. The cost structure is being managed; distribution costs, going forward, should be the main focus of the management.
The assigned ratings continue to derive strength from the strong sponsor with vast experience in the oil and gas sector, experienced management, including strong technical and operational support from the parent company PARCO. The ratings are dependent on sustained business model and its share in the overall country’s LPG movement. Sustainability in system share remains vital for the ratings. Meanwhile, adherence to strong performance indicators is imperative.

About the Entity
PARCO Pearl Gas (Pvt.) Limited is wholly owned subsidiary of Pak-Arab Refinery Limited, Pakistan’s largest and modern refinery. PPGL was established back in 1982 under name ‘Lifeline (Private) Limited’ and after various acquisition and takeovers, it was renamed to Parco Pearl Gas (Private) Limited after acquisition by Pak-Arab Refinery Limited on 1st October 2012. PARCO Pearl Gas (Pvt.) Limited is the largest LPG marketing company in Pakistan and effectively managing the fleet of 80 vehicles (bowsers) which are company & contractor owned, operating and delivering 160,000 MT of product every year. The Company’s overall control is overseen by six-member Board of Directors all nominated by PARCO. Mr. Kashif Siddiqui, previously worked in PSO took charge as CEO of PPGL in January 2022 and has been aptly deploying his expertise since then.

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.