PACRA Assigns Entity Ratings to Bakri Energy Limited

Lahore, February 16, 2018 (PPI-OT): The ratings reflect Bakri Energy’s association with a strong sponsor – Saudi based Bakri Group. The company has a growing presence in competitive oil marketing industry. Over the years, Bakri Energy has managed to gain 3% market share and has 300 retail outlets. Bakri Energy capitalizes on second largest oil storage infrastructure of over 180,825 MTs spread across three terminals at Port Qasim, Machike and Shikarpur. The company’s significant ongoing and expected investment in infrastructure (storage, supply chain, and retail outlets) will facilitate sustainable growth. The company has witnessed stable growth in revenues where one-third of the revenue is generated from sales of Furnace Oil.

Due to lower consumption of Furnace Oil in the country, the management intends to diversify the revenue stream and improve earnings: Bakri Energy plans to focus on retail clients and enhance its supply chain infrastructure by setting-up its own supply chain company. To nurture its retail penetration the company is 1) rebranding its outlets on model lines in a phased manner, 2) open new outlets along CPEC route and in the central parts of the country (mainly Punjab) where it has currently, low share, and 3) laying down supportive storage capabilities to ensure timely availability of its products.

The rating is supported by strong management structure reflected by three management committees in place to efficiently procure and deliver the product. In order to support expansion, the company would be using a combination of debt and initial public offering proceeds. Bakri Energy has healthy financial risk profile with strong coverage indicators and low leveraging. Currently, the company has no long-term debt whereas short-term borrowing needs emanate from working capital management. Given its plans, the debt level would go up but moderately. In addition to the timely development of infrastructure and supply chain, the ratings are dependent on Bakri Energy’s ability to build broad-based market penetration. This should help to minimize the impact of constrained demand of FO.

For more information, contact:
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com