Lahore, February 11, 2022 (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. The Company is currently procuring gas from six fields and also secured two new contracts for PPL gas fields. E-Gas significantly enhanced its customer base and reduced the concentration risk. E-Gas operates the fleet of 28 vehicles and further expansion is underway.
Though, expansion will increase leveraging but is expected to remain within comfortable range. Though the revenues during the year remain stagnant but profitability decreased on account of rapid increase in distribution cost. Furthermore, strengthened equity base (FY21: PKR 3bln, FY20: PKR 2.6bln) over the last few years provide comfort to financial risk matrix. 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 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 dip 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: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com