Aslam Energy (Pvt.) Limited

CREDIT RATING REPORT | May-25

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
05-May-25 BBB+ A2 Stable Maintain -
14-Jun-24 BBB+ A2 Stable Maintain -
16-Jun-23 BBB+ A2 Stable Maintain -
17-Jun-22 BBB+ A2 Stable Maintain -
17-Jun-21 BBB+ A2 Stable Initial -
About the Entity

Aslam Energy (Pvt.) Limited ('Aslam Energy' or 'the Company') was incorporated as a private limited company in 2018 under the repealed Companies Act'17. The Company primarily trades and distributes Diesel, Petrol, Furnace Oil, and Lubricants, while also offering fleet logistics services. The Company is owned by Mr. M. Waris (~34%), Mr. Asif (~33%), and Mr. Rana M. Arif (~33%). Mr. Arif serves as the Chairman & CEO of the Company. He is assisted by a team of experienced professionals.

Rating Rationale

Aslam Energy (Pvt.) Limited (“Aslam Energy” or “the Company”) holds ratings that reflect its affiliation with Flow Petroleum (Pvt.) Limited, supported by a robust business profile. The ratings also incorporate the sponsors’ extensive industry experience. The Company operates across two core segments: Trading and Distribution of POL (Petroleum, Oil, and Lubricants) products, and Fleet Logistics Services catering to various Oil Marketing Companies (OMCs). The trading segment is divided into retail and bulk sales. On the retail side, Aslam Energy sells POL products via cash and fuel cards through a network of approximately 44 retail outlets, primarily concentrated in the Punjab region. On the bulk side, it supplies POL products directly to corporate clients on credit terms. To support its logistics operations, the Company owns a fleet of 30 lorries and leases an additional 6 vehicles. The fleet primarily services group companies, including Flow Petroleum and Quality 1, generating modest revenue from carriage services. Going forward, the Company is also eyeing considerable hospitality income from its storage facilities. Revenue remains on an upward trajectory, with ~98% derived from the trading and distribution segment, and the remaining ~2% from logistics operations. In FY24, the Company reported a ~5.9% increase in revenues. However, overall margins came under pressure due to elevated procurement costs and inflation-driven increases in operational expenses. As part of its forward-looking strategy, Aslam Energy has acquired a ~65% equity stake in TransAsia Refinery Limited (TRL), with the remainder held by sponsors and affiliates, including Flow Petroleum. Once operational, this investment is expected to significantly enhance the Company’s supply chain and operational capabilities. Nevertheless, timely execution of the transaction remains critical, as several regulatory approvals are still pending. From a financial risk perspective, Aslam Energy maintains a sound risk profile, supported by adequate coverage ratios, a stable working capital cycle, and a low-leverage capital structure, all contributing to its overall financial stability.

Key Rating Drivers

The rating takes comfort from stable management, prudent decision-making and consistent revenue generation. Moreover, the ratings remain dependent on the Company's ability to maintain a sound financial profile, enhance capacity utilization through infrastructure and supply chain development, increase market share and market penetration amidst rising competition and censure effective management of trade debts.

REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

Aslam Energy (Pvt.) Limited

rating analysis

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Profile
Legal Structure

Aslam Energy (Pvt.) Limited (‘Aslam Energy’ or 'the Company’) was incorporated in 2018 under the Companies Act, 2017 as a private limited company.


Background

Rana Mohd. Aslam (Late) founded Aslam Oil Traders (the Group) in the early 1980s, focusing on logistics. Initially a small-scale operation, the business has since expanded significantly. The younger generation later assumed control of the Company, and in 2018, it was registered as Aslam Energy.


Operations

The Company is mainly engaged in the business of the distribution of PoL products. It also provides logistic services (carriage service) to various OMCs. It has a fleet of ~36 vehicles owned directly with sister concerns and has the administration of ~44 filling stations as of Jun-24. The Company is also engaged in providing hospitality services to other OMCs.


Ownership
Ownership Structure

Ownership of the Company lies with three brothers: Mr. M. Waris (~34%), Mr. M. Asif (~33%), and Mr. M. Arif (~33%).


Stability

The ownership structure seems to be stable and is anticipated to remain unchanged in the foreseeable future.


Business Acumen

Aslam Energy is led by experienced professionals in Pakistan's oil sector, reinforcing its strong business acumen. This provides the Company with valuable experience and industry-specific knowledge, along with the strong business acumen of the Group that has been operating for over three decades.


Financial Strength

The Company is part of the Group having stakes in Flow Petroleum, Quality 1, Aslam Sons, and Flow Base. The Group is financially sound to support the Company, if needed.


Governance
Board Structure

The Board (BoD) is dominated by the Sponsors only, Mr. M. Waris, Mr. M. Arif, and Mr. M. Asif. The Board lacks independence in the decision making process.


Members’ Profile

The BoD members have extensive experience in the oil sector. Mr. M. Waris chairs the BoD and brings extensive experience of over 18 years. Other members of the BoD also possess significant experience in the oil marketing sector.


Board Effectiveness

The BoD is assisted by four sub-committees: Audit, Finance, Budgeting, and HR Committee. Meetings of these committees are conducted on a frequent basis.


Financial Transparency

The Company's External Auditors, M/s PKF FRANTS, issued an unqualified opinion on the financial statements for the year ended Jun-24. The firm is QCR rated and categorized in 'B' category on the SBPs panel of auditors.


Management
Organizational Structure

The Company operates through: i) Operations & Logistics ii) Treasury & Finance, and iii) HR and Admin iv) Sales v) Accounts & Taxation vi) Internal Audit, and vii) Safety & Surveillance functions. Each function is managed by a respective Head, who reports to the Cheif Operating Officer (COO). The COO reports to the CEO, who then reports to the BoD and make pertinent decisons. The CEO is the man at the last mile.


Management Team

Mr. M. Arif, the CEO, has extensive experience of 12 years in the Retail & Oil Transportation sector. He has been associated with the business since inception. He is supported by a team of skilled professionals.


Effectiveness

The Company does not have any formal management committees in place. Management meetings are conducted as per requirement, contributing to the decision-making process.


MIS

The Company has implemented an ERP system integrated with all functions of the business, which has the ability to generate management reports readily.


Control Environment

The Company maintains an in-house internal audit function, which enhances risk management, control, and governance processes, as well as improves business practices by establishing standard operating procedures (SOPs).


Business Risk
Industry Dynamics

Pakistan heavily depends on imports for its energy requirements due to limited domestic PoL production. A substantial increase in PoL import costs was witnessed due to global challenges. This along with rupee depreciation further impacted the local overall cost structure. During FY24, the demand for PoL products declined by ~9% due to macroeconomic pressures. Transportation and Power sectors remain the main consumers, accounting for ~89% of the total demand. Despite having fixed margins, OMCs bear the impact of high working capital costs, which have risen sharply due to the aforementioned factors. This requires vigilance over the short to medium term for the OMC sector.


Relative Position

The Company holds a significant market share in PMG and HSD in the Punjab area in the distribution and sale of PoL goods.


Revenues

The Company’s revenue is largely dominated by the trading of petroleum products (~98%), followed by carriage services revenue (~2%). During FY24, the revenue of the Company witnessed an increase of ~5.92% and was reported at ~PKR 48.3bln (FY23: ~PKR 45.6bln). This increase is attributed to inflationary pressure coupled with increased volumetric sales. During 6MFY25, the revenue of the Company witnessed a decrease of ~20.4% and was reported at ~PKR 19.2bln (6MFY24: ~PKR 30.1bln). Moving forward, it is anticipated that the company's revenues will further improve as an investment in TransAsia Refinery (TRL) will lead to increased market presence.


Margins

Owing to high operational expenses and inefficiencies during FY24, the Company's overall margins posted a decline. Gross margin decreased to ~1.2% (FY23: ~1.9%). Similarly, due to the trickle-down impact, the operating margin declined to ~1.0% during FY24 (FY23: ~1.7%). Net profit margin of the Company reported at ~0.4% (FY23: ~1.3%). During 6MFY25, a similar result was reported with a Gross margin of ~1.1% (6MFY24: ~1.9%). Following a trickle-down effect, the Company reported an operating margin of  ~0.8% (6MFY24: ~1.7%) and ultimately a net-profit margin of ~0.3% (6MFY24: ~0.8%). Moving forward, the Company’s margins are expected to remain stable.


Sustainability

Going forward, the Company intends to increase its retail outlet presence across Pakistan. This expansion of operations and customer base will naturally foster organic growth. Also, the investment in TransAsia Refinery Limited (TRL) is poised to bolster the Company’s performance by reducing import price parity and facilitating price adjustments. This enhancement will synergize operational efficiencies and enhance commercial viability.


Financial Risk
Working capital

As of FY24, Net Working Capital days decreased to (-5) days (FY23: (-7) days). Whereas, trade receivable days of the Company remained stable at ~1 day as of FY24 (FY23: ~2 days). Meanwhile, the Company's trade payable days stand at 6 days as of FY24 (FY23: 9 days). During 6MFY25, the Net Working Capital days of the Company decreased further to (-14) days (6MFY24: (-8) days). Whereas, trade receivable days of the Company remained stable at ~2 days (6MFY24: ~3 days). Meanwhile, the Company's trade payable days increased to ~16 days (6MFY24: ~11 days), highlighting improved credit terms, enhancing the Company's Net Working Capital Cycle.


Coverages

As of FY24, the Company observed a decline in the interest coverage ratio, reported at ~10.1x (FY23: ~25.2x); however, it still remains sufficient to meet short-term obligations. This reduction is attributed to a decrease in EBITDA alongside elevated finance costs. As of FY24, the EBITDA of the Company stood at ~PKR 594mln (FY23: ~PKR 759mln). Meanwhile, the Company's finance cost stood at ~PKR 87mln as of FY24 (FY23: ~PKR 43mln). The Company experienced low net income, influenced by the high financing costs, resulting in a decrease in EBITDA, ultimately impacting the interest coverage ratio. During 6MFY25, similar trends were observed with the interest coverage ratio declining to ~8.9x (6MFY24: ~17.9x) due to a decline in EBITDA (6MFY25: ~227mln, 6MFY24: ~522mln), increasing the pressure on the Company's ability to meet its obligations. Moving forward, the Company's coverage are expected to remain stable.


Capitalization

Aslam Energy demonstrates an adequate capital structure, as evidenced by its leverage ratio (debt/capital), which stood at ~33.3% as of FY24 (FY23: ~13.8%). Equity of the Company stood at ~PKR 3,307mln as of FY24 (FY23: ~PKR 3,127mln). Total borrowings of the Company stood at ~PKR 1,651mln as of FY24 (including related party exposure of ~PKR 1,370mln). The Company mainly utilized short-term borrowing to maintain its working capital cycle, which stood at ~PKR 261mln (including CMLTB of ~PKR 16mln). Meanwhile, long-term borrowing of the Company clocked to ~PKR 20mln in FY24 (FY23: ~PKR 28mln). During 6MFY25, the Company's leverage ratio improved to ~19.1% (6MFY24: ~32.1%) following a decline of ~50% in the Company's total borrowings (6MFY25: ~PKR 797mln, 6MFY24: ~1,591mln).
 
 

May-25

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Aslam Energy (Pvt.) Limited

financial summary

(PKR mln)

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Dec-24
6M		 Jun-24
12M		 Jun-23
12M		 Jun-22
12M
A. BALANCE SHEET
1. Non-Current Assets 3,752 3,740 3,160 396
2. Investments 0 0 0 0
3. Related Party Exposure 1,447 903 961 1,149
4. Current Assets 2,674 1,389 1,204 1,415
a. Inventories 330 345 280 260
b. Trade Receivables 259 144 179 225
5. Total Assets 7,872 6,031 5,325 2,961
6. Current Liabilities 3,689 1,058 1,689 1,301
a. Trade Payables 2,958 471 1,227 903
7. Borrowings 439 281 358 310
8. Related Party Exposure 358 1,370 144 287
9. Non-Current Liabilities 15 15 8 9
10. Net Assets 3,372 3,307 3,127 1,054
11. Shareholders' Equity 3,372 3,307 3,127 1,054
B. INCOME STATEMENT
1. Sales 19,240 48,313 45,618 20,759
a. Cost of Good Sold (19,032) (47,727) (44,756) (19,614)
2. Gross Profit 208 586 862 1,144
a. Operating Expenses (46) (79) (73) (52)
3. Operating Profit 162 507 789 1,093
a. Non Operating Income or (Expense) 6 (27) 49 (99)
4. Profit or (Loss) before Interest and Tax 167 480 838 993
a. Total Finance Cost (26) (87) (43) (26)
b. Taxation (77) (213) (180) (175)
6. Net Income Or (Loss) 65 181 615 793
C. CASH FLOW STATEMENT
a. Free Cash Flows from Operations (FCFO) 149 422 474 893
b. Net Cash from Operating Activities before Working Capital Changes 118 344 436 869
c. Changes in Working Capital (145) 76 1,146 (289)
1. Net Cash provided by Operating Activities (27) 420 1,581 580
2. Net Cash (Used in) or Available From Investing Activities (71) (640) (1,909) (104)
3. Net Cash (Used in) or Available From Financing Activities 158 (83) 28 123
4. Net Cash generated or (Used) during the period 60 (303) (299) 598
D. RATIO ANALYSIS
1. Performance
a. Sales Growth (for the period) -20.4% 5.9% 119.8% 178.1%
b. Gross Profit Margin 1.1% 1.2% 1.9% 5.5%
c. Net Profit Margin 0.3% 0.4% 1.3% 3.8%
d. Cash Conversion Efficiency (FCFO adjusted for Working Capital/Sales) 0.0% 1.0% 3.6% 2.9%
e. Return on Equity [ Net Profit Margin * Asset Turnover * (Total Assets/Shareholders' Equity )] 3.9% 5.6% 29.4% 120.5%
2. Working Capital Management
a. Gross Working Capital (Average Days) 2 1 2 4
b. Net Working Capital (Average Days) -14 -5 -7 -6
c. Current Ratio (Current Assets / Current Liabilities) 0.7 1.3 0.7 1.1
3. Coverages
a. EBITDA / Finance Cost 8.9 10.1 25.2 45.8
b. FCFO / Finance Cost+CMLTB+Excess STB 0.2 1.9 0.6 3.0
c. Debt Payback (Total Borrowings+Excess STB) / (FCFO-Finance Cost) 7.3 4.3 2.2 0.7
4. Capital Structure
a. Total Borrowings / (Total Borrowings+Shareholders' Equity) 19.1% 33.3% 13.8% 36.2%
b. Interest or Markup Payable (Days) 0.0 34.6 20.5 22.4
c. Entity Average Borrowing Rate 3.8% 4.7% 5.6% 4.1%

May-25

www.pacra.com

Aslam Energy (Pvt.) Limited

rating scale

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May-25

www.pacra.com

Aslam Energy (Pvt.) Limited

regulatory disclosure

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  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
    2. Conflict of Interest
      1. The Rating Team or any of their family members have no interest in this rating (Chapter III; 12-2-(j))
      2. PACRA, the analysts involved in the rating process, and members of its rating committee and their family members do not have any conflict of interest relating to the rating done by them (Chapter III; 12-2-(e) & (k))
      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
      4. Explanation: for the purpose of the above clause, the term "family members" shall include only those family members who are dependent on the analyst and members of the rating committee.
  2. Restrictions
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    2. PACRA does not disclose or discuss with outside parties or make improper use of the non-public information which has come to its knowledge during a business relationship with the customer. (Chapter III; 10-7-(d))
    3. PACRA does not make proposals or recommendations regarding the activities of rated entities that could impact a credit rating of the entity subject to rating. (Chapter III; 10-7-(k))
  3. Conduct of Business
    1. PACRA fulfills its obligations in a fair, efficient, transparent, and ethical manner and renders high standards of services in performing its functions and obligations. (Chapter III; 11-A-(a))
    2. PACRA uses due care in the preparation of this Rating Report. Our information has been obtained from sources we consider to be reliable, but its accuracy or completeness is not guaranteed. PACRA does not, in every instance, independently verify or validate information received in the rating process or in preparing this Rating Report. (Clause 11-(A)(p))
    3. PACRA prohibits its employees and analysts from soliciting money, gifts, or favors from anyone with whom PACRA conducts business. (Chapter III; 11-A-(q))
    4. PACRA ensures before the commencement of the rating process that an analyst or employee has not had a recent employment or other significant business or personal relationship with the rated entity that may cause or may be perceived as causing a conflict of interest. (Chapter III; 11-A-(r))
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    3. PACRA discloses that no shareholder directly or indirectly holding 10% or more of the share capital of PACRA also holds directly or indirectly 10% or more of the share capital of the entity which is subject to rating or the entity which issued the instrument subject to rating by PACRA. (Chapter III; 12-2-(f))
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    3. PACRA initiates an immediate review of the outstanding rating upon becoming aware of any information that may reasonably be expected to result in downgrading of the rating. (Chapter III; 17-(c))
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  6. Probability of Default
    1. PACRA’s Rating Scale reflects the expectation of credit risk. The highest rating has the lowest relative likelihood of default (i.e., probability). PACRA’s transition studies capture the historical performance behavior of a specific rating notch. Transition behavior of the assigned rating can be obtained from PACRA’s Transition Study available at our website. (www.pacra.com) However, the actual transition of rating may not follow the pattern observed in the past. (Chapter III; 14-3(f)(vii))
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May-25

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