Lahore, May 12, 2023 (PPI-OT): The ratings reflect the strong business profile of Sitara Petroleum Service Limited. Sponsors of the Company are in the business for over three decades, reflecting their business acumen. The company is primarily engaged in two business segments namely i) Trading and distribution of POL products and ii) Fleet logistic services to various OMCs. Trading segment is further split into retail and bulk units. Under the retail side, the company operates a network of ~52 retail stations which is mainly spread out in the Punjab region whereas, under the bulk segment the company provides POL product directly to customers.

Company’s prime profits are being generated from the trading and distribution business. It carries ~86.0% share in the gross profit. The vast majority (~90%) of the fleet logistic revenue generated by the company is derived from its group company, Gas and Oil Company (GO). The Company’s financial risk profile is characterized by adequate leveraged capital structure. This along with improved cashflows help manage the financial risk. Adequate coverages lend support to financial profile. Management, being cognizant of the current industry situation, is embarking on functionalizing an Oil Marketing company to augment and diversify its revenue stream.

The ratings are dependent on the management's ability to sustain its business volumes while holding the margins. Sustaining the business and financial profile along with improvement in the governance framework would be vital for the ratings. Meanwhile, financial transparency is considered paramount.

For more information, contact:

Analyst,

The Pakistan Credit Rating Agency Limited (PACRA)

Awami Complex, FB1, Usman Block New Garden Town,

Lahore, Pakistan

Tel: +92-42-5869504-6

Fax: +92-42-5830425

Email: hammad.rashid@pacra.com

Website: www.pacra.com