Tag Archives: JCR-VIS Credit Rating Company Limited

JCR-VIS assigns ratings to Quaid-e-Azam Solar Power (Private) Limited

Karachi, November 17, 2016 (PPI-OT):JCR-VIS Credit Rating Company Limited (JCR-VIS) has assigned initial entity ratings of ‘AA-/A-1’ (Double A Minus /A-One) to Quaid-e-Azam Solar Power (Private) Limited (QASPL). Outlook on the assigned ratings is ‘Stable’. The ratings assigned to QASPL takes into account its ownership profile with Government of Punjab (GOPB) holding 100% stake in the company. The experience of the Engineering, Procurement and Construction and Operations and Maintenance contractor, TBEA Xinjiang Sun oasis Co. Ltd, in executing similar projects in the past largely mitigates the associated operational risk. Project cash flows are a function of tariff defined by NEPRA.

QASPL is part of GOPB initiative to establish a 1,000 MW solar park in Bahawalpur. The company has secured a power generation license from NEPRA for 25 years, lasting till December, 2039. The energy is purchased by Central Power Purchasing Agency (Guarantee) Limited under the Energy Purchase Agreement. As per the implementation agreement, payment obligations of the power purchaser are guaranteed by the Government of Pakistan.

The plant operated at 18.28% capacity with annual production of 160.09 GWh during the first year of operation. The capacity factor of the plant is subject to 0.7% annual degradation. Total energy generated during FY16 surpassed the benchmark energy by 6,792.59 MWh. Total project cost amounted to Rs. 15.2b with debt to equity ratio of 75:25. The company availed a long-term loan facility amounting to Rs. 11.1b with a tenor of 11 years, including a grace period of 1 year.

As per the agreement, QASPL is required to maintain a minimum Debt Service Coverage Ratio (DSCR) of 1.25 and minimum current ratio of 1.0. At end-FY16, DSCR was reported 2.75 while current ratio stood at 1.32. The company’s profitability draws support from high margins while funds from operations are projected to meet future debt obligations.

For more information, contact:
CFA
JCR-VIS Credit Rating Company Limited
VIS House, 128/C,
25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: sobia@jcrvis.com.pk

JCR-VIS Upgrades Corporate Governance Rating of Allied Bank Limited

Karachi, November 09, 2016 (PPI-OT):JCR-VIS Credit Rating Company Limited (JCR-VIS) has upgraded the corporate governance rating of Allied Bank Limited (ABL) from “CGR-9” to “CGR-9+”. This rating is based on a scale ranging from CGR-1 (lowest) to CGR-10 (highest). The previous rating action was announced on December 04, 2015.

The ratings assigned to ABL reflects very high level of corporate governance practices instituted in the bank underpinned by sound internal control environment, financial transparency and regulatory compliance. The bank implemented corporate governance framework which outlines institutions policy on Board composition and structure, its roles and responsibilities and meetings and decisions of the Board. Orientation and director development, compensation of directors and confidentiality matters have also been incorporated in the framework. The Board comprises seasoned professionals with diverse background and experience.

Over the years, internal control environment at ABL has been strengthened with procedures and systems effectively implemented and monitored in all major control functions including internal audit, compliance and risk management. A team of experienced and professional personnel is in place to administer control functions. ABL has an approved succession plan in place, assisting the bank in timely and smooth transitions. Human Resource Group is involved in continuous development of the workforce. Employee turnover indicates general satisfaction of employees at various cadres.

ABL adheres to its core business line and considers shareholders’ wealth creation as primary objective. Quality of communications with the shareholders is considered to be on equal footing with industry practices and no limitation in communication between the management and shareholders was observed. ABL aptly disseminates various information useful for its stakeholders through reports and updated website enabling them to formulate a general opinion regarding risk faced by the bank.

For more information, contact:
CFA
JCR-VIS Credit Rating Company Limited
VIS House, 128/C,
25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: sobia@jcrvis.com.pk

JCR-VIS upgrades Insurer Financial Strength rating of The Co-operative Insurance Society of Pakistan Limited

Karachi, November 08, 2016 (PPI-OT):JCR-VIS Credit Rating Company Limited (JCR-VIS) has upgraded the Insurer Financial Strength (IFS) rating of The Co-operative Insurance Society of Pakistan Limited (CISPL) to ‘BB’ (Double B) from ‘BB-’ (Double B – minus). Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on September 23, 2015.

The ratings assigned to CISPL take into account adequate liquidity profile of the company in relation to the business volumes written. The claims ratio has remained negligible in the recent years while higher management expenses in relation to business generated has led to continued underwriting losses. The ratings remained constrained on account of limited scale of business of the company.

The majority of insurance business is routed through CSIPL’s largest shareholder; Provincial Cooperative Bank Limited (PPCBL) reflecting high concentration. While underwriting operations continues to report losses, investment and rental income supported the bottom line with CSIPL posting profit during the outgoing year. Reinsurance panel and treaty terms remained unchanged with reinsurance coverage arranged through Pakistan Reinsurance Company Limited.

Liquid asset on balance sheet comprises listed equities carrying sizeable unrealized revaluation surplus. The paid up capital of the CSIPL increased to Rs. 500m (FY14: Rs. 300m) through transfer of revaluation surplus on land and building amounting to Rs. 200m. Given depressed business volumes, operating and financial leverage remains low.

For more information, contact:
CFA
JCR-VIS Credit Rating Company Limited
VIS House, 128/C,
25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: sobia@jcrvis.com.pk

Update on Ratings of K-Electric Limited

Karachi, November 03, 2016 (PPI-OT):JCR-VIS Credit Rating Company Limited (JCR-VIS) has noted the announcement relating to ‘Sale and Purchase Agreement’ entered into between KES Power Limited (majority owned by Abraaj Group) and Shanghai Electric Power Company Limited (SEP) for sale of up to 66.4% shares of K-Electric Limited (KE).

The transaction will close once customary closing conditions and requisite regulatory approvals are obtained. JCR-VIS believes that financial profile and ownership structure of SEP along with expected synergies in various business and operational areas will have positive implications for KE. JCR-VIS will await strategic announcements, if any, from the new sponsor.

SEP is controlled by State Power Investment Corporation (SPIC), which is a fortune 500 company in China. Listed on the Shanghai Stock Exchange, SEP is mainly responsible for the power supply of Shanghai, with generation of 35.23 TWh in 2015.

For KE, JCR-VIS has an outstanding entity rating of ‘AA/A-1’ (Double A/A-One). Sukuk 2 (Rs. 3.75b) and Sukuk 3 (Rs. 1.5b) are rated ‘AA’ (Double A) while Sukuk 4 (Rs. 22b) has a rating of ‘AA+’ (Double A Plus). The assigned ratings predicate the strategic importance of KE as a vertically integrated utility having exclusive rights to distribute electricity in the largest metropolitan city of Pakistan. Ratings also incorporate turnaround in financial and operational performance metrics achieved by KE since its takeover in 2009 by Abraaj Group.

For more information, contact:
CFA
JCR-VIS Credit Rating Company Limited
VIS House, 128/C,
25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: sobia@jcrvis.com.pk

JCR-VIS assigns Initial Ratings of Rajby Textiles (Private) Limited

Karachi, October 27, 2016 (PPI-OT):JCR-VIS Credit Rating Company Limited (JCR-VIS) has assigned initial ratings of Rajby Textiles (Private) Limited (RTPL) at ‘A-/A-1’ (Single A Minus/A-One). Outlook on the assigned ratings is ‘Stable’.

RTPL is part of Rajby Group (RG) operating in textile field for about forty years. RG’s operations over the last two decades have been concentrated in export oriented garment stitching under the umbrella of Rajby Industries and denim manufacturing performed at Rajby Textiles (RT) since Feb’2005. RT upgraded to a state of the art denim manufacturing facility in 2011. RTPL took over operations of RT from July’2015 onwards. An expansion plan doubling the capacity of RTPL is underway, expected to be complete by 4Q-FY17.

The rating takes into account the sound sponsor profile and their successful growth in the garment and denim manufacturing and in its export marketing. The rating also relies upon the current and projected strong liquidity and capitalization of RTPL along with the ability to efficiently manage production capacity utilization to enhance revenue generation.

Over the last few years, with the increase in production capacity, RTPL has been able to diversify revenue streams through increased sales in the international market, while supplying majority proportion to a group company. This is achieved through the use of state-of-the-art production machinery (sourced from Germany and Belgium) and a motivated work-force.

Y-o-Y growth in fund generation provides RTPL with a strong debt servicing ability. The company utilizes debt for the acquisition of imported machinery and for working capital requirements. However, despite growth in additional debt for expansionary purposes, leverage indicators and servicing ability are projected to remain healthy. In line with current production trends, RTPL envisages that FY20 onwards, all working capital requirements will be met through internal cash generation. Rating would be dependent upon maintaining of projected risk profile, going forward.

For more information, contact:
Ms. Sobia Maqbool
CFA
JCR-VIS Credit Rating Company Limited
VIS House, 128/C,
25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: sobia@jcrvis.com.pk

JCR-VIS finalizes rating of ‘A-’ for the PPTFC by Sindh Nooriabad Power Company Phase-II (Private) Limited

Karachi, October 14, 2016 (PPI-OT):JCR-VIS Credit Rating Company Limited (JCR-VIS) has finalized rating of ‘A-’ (Single A Minus) to the Privately Placed Term Finance Certificates (PPTFCs) of Sindh Nooriabad Power Company Phase-II (Pvt.) Limited. The Preliminary rating of A+ (Single A Plus) was announced on January 16, 2015.

The project has experienced time and cost over-runs largely on account of external factors. The Commercial Operation Date (COD) which was scheduled for January’2016 has been delayed and the management now expects it to be by end-December’2016. The management is also arranging financing from various sources to meet cost over-runs. We have been given to understand that pending COD of the project, the security structure of the TFC is not commensurate with that contemplated. In view of the change in the rating drivers, the rating has been revised and a ‘Negative’ outlook has been assigned.

The ratings may face downward pressure in case COD is delayed further than already envisaged by management. The rating incorporates the support of Government of Sindh as one of the key stakeholder in the institution under the Public-Private Partnership scheme with Technomen Kinetics (Pvt.) Limited.

For more information, contact:
Ms. Sobia Maqbool
CFA
JCR-VIS Credit Rating Company Limited
VIS House, 128/C,
25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: sobia@jcrvis.com.pk