PACRA Upgrades Entity Ratings of E-GAS (Private) Limited

Lahore, May 03, 2019 (PPI-OT): E-Gas (Pvt.) Ltd operates a unique business model of supplying CNG through a virtual pipeline. Overall the industry is dependent on the two major state owned gas distribution companies; E-Gas through its virtual pipeline is capturing a small niche in that market. There is room available in this segment as the gas being distributed is a small fraction of what is being flared into the atmosphere. The demand from the customers is need-driven, which is perpetually increasing, 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 and fulfilling the ever increasing demand through a well-managed fleet of logistical infrastructure. E-Gas has expanded its fleet size over the last few years. The Company is currently procuring gas from four fields and has sustained customer base. The management is planning to further enhance fleet size which will result in improved revenues and profitability.

Expansion will increase leveraging but is expected to remain within comfortable range supplemented by cashflows of the Company. The cost structure is being managed; distribution costs, going forward, should be the main focus of the management. The sponsors have a good understanding of the business along with happenings in the industry. The sponsor support is evident from presence of interest free long term loan and personal guarantees of directors on the book.

The ratings are dependent on sustaining a steady revenue stream and financial risk profile. The ratings would positively benefit from the corporate governance principles, internal control systems and financial strength of E-Gas. Any prolonged downturn in subdued business volume and low gas prices can have a detrimental effect.

For more information, contact:
Analyst
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