The Pakistan Credit Rating Agency (PACRA), on Tuesday August 28 maintained the Entity Ratings previously assigned to the firm at ‘A+’ for the Long Term and at ‘A1+’ for the Short Term. A stable outlook has been maintained for the firm.
Initial Entity Ratings were assigned to the firm previously on February 15, 2018.
According to the rating agency, the ratings reflect BE Energy Limited’s (formerly Bakri Energy Limited) association with a strong sponsor, namely the Saudi based Bakri Group.
In addition, it said that over the years, BE Energy has managed to gain an approximately 3% market share and has around 308 retail outlets.
BE Energy capitalizes on second largest oil storage infrastructure of over 180,000 MTs spread across three terminals located at Port Qasim, Machike, Shikarpur, and one depot at Daulatpur.
“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 and also manages to diversify its product mix (HSD: PMG: FO – 45% : 35% : 20%),” says PACRA. “It has been successful in managing the impact of the reduction in demand of FO,” it added.
According to a press release issued by PACRA, BE Energy plans to focus on retail clients and enhance its supply chain infrastructure. To nurture its retail penetration the company is 1) rebranding its outlets on modern 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 further supported by a strong management structure reflected by three management committees in place to efficiently procure and deliver the product.
BE 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,” says PACRA.
In addition to the timely development of infrastructure and supply chain, the ratings are dependent on BE Energy's ability to build broad-based market penetration. Additionally, with the new debt to be acquired, sustainability of coverages would remain important for the ratings.
BE Energy Limited incorporated in Pakistan and commenced its operations in 2007. BE Energy is owned by Rawafid Investment LLC (~99.97%) based in UAE, while its shareholding lies with the members of Bakri family. Bakri group was founded in late 60's, the group provides aviation fuel services, shipping, time charter services, shipping management & marine support services in the middle east.
Primarily, BE Energy is engaged in the procurement, storage, distribution, marketing and import of petroleum products and lubricants.
The board of BE Energy comprises four experienced professionals. Two members are from Bakri family while others are group executives. Both of the sponsor directors are actively involved in the oversight of the company. Mr. Hussain Al Shammaa is the CEO of the company. He has been involved in the oil business for the last 35 years and was previously associated with Kuwait Petroleum Company (KPC).
The company has initiated plans to enhance its board to seven members while also adding independent directors.
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