The Pakistan Credit Rating Agency Limited
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Behrooz Fareed

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PACRA Maintains Entity Ratings of Jinn Petroleum (Pvt.) Limited

Rating Type Entity
(31-Mar-23 )
(31-Mar-22 )
Action Maintain Initial
Long Term BBB BBB
Short Term A2 A2
Outlook Stable Stable
Rating Watch - -

The ratings incorporate Jinn Petroleum 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. Jinn Petroleum aims to carry out its expansion strategy by further expanding its retail network to all across Pakistan. The Company has two storage capacities located at HUB and Sahiwal. In addition to 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 Petroleum plans construction of storages at Daulatpur, Tarujabba and the extension in Sahiwal Depot in phases. It 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. During FY22, the net sales of the Company grew by 54% to PKR 11,717mln as compared to PKR 7,612mln in the corresponding year. During 6MFY23, the figure rose to PKR 17,607mln. This increase in sales is attributed to a surge in oil prices and sales volumes. During FY22, the Company reported a gross profit of PKR 879mln (FY21: PKR 400mln) displaying a growth of 2.2 times. The Company reported an operating profit of PKR 468mln (FY21: PKR 64mln) due to trickle-down effect of better sales. The Company achieved stellar results with the highest ever net profit after tax of PKR 243mln during FY22 (FY21: PKR 84mln), owing to increase in OMC margins, sales and efficient inventory management. As at end FY22, The Company has immensely improved its leveraged capital structure with debt-to-equity ratio of ~27% as compared to 62% in previous corresponding period. The Company has total debt of PKR~ 3,351mln as at end FY22 and an equity of PKR ~1,488mln. Moving forward, the Company aims to diversify its distribution channels, strengthening its business risk profile.
The rating captures the Company’s 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 including Mr. Irfan Qureshi, former MD PSO, the advisor to Jinn Petroleum, having an extensive experience of over 40 years in sales, marketing, logistics, customer services, policy formulation, public and government relations in oil and other sectors.

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.