JCR-VIS Reaffirms Entity Ratings of Pakistan Security Printing Corporation (Pvt.) Ltd at AAA/A-1+,

Karachi, December 18, 2012 (PPI-OT): JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the medium to long-term entity rating of Pakistan Security Printing Corporation (Pvt.) Ltd. (PSPC) at ‘AAA’ (Triple A) with a ‘Stable’ outlook. Short-term rating has also been reaffirmed at ‘A-1+’ (A-One Plus).

Ratings derive strength from the sovereign ownership (GoP), besides the institution’s strategic importance as Pakistan’s sole printer of currency notes. Ratings also draw comfort from the company’s financial position, which has strengthened over the years on the back of profitable business operations and steady cash flows. Internal capital generation has allowed PSPC to maintain sound capitalization; liquidity profile of the institution has also remained strong.

The management intends to meet future capex requirement through internal sources. Credit risk emanating from the investment portfolio and plan assets of employees’ pension fund is considered limited as these are largely invested in government securities and instruments issued by counterparties having sound risk profiles. With amendment in the applicable accounting standard, effective for financial year ended June 30, 2014 in case of PSPC, actuarial losses/gains will have to be recognized immediately in other comprehensive income. The company has room to absorb the unrealized losses.

In the past, PSPC had voluntarily adopted the Code of Corporate Governance (CCG); following the introduction of new CCG, further changes in the governance structure would be required to maintain compliance status. GoP has placed a ban on fresh hiring in public sector organizations; if this continues for a prolonged period, it may create gaps in the technical resources available with the institution.

For more information, contact:
Mr. Javed Callea
Advisor
JCR-VIS Credit Rating Company Limited
Tel: +9221 35311861 (10 lines) (Ext: 501)
Fax: +9221 35311872-3
E mail: javed.callea@jcrvis.com.pk

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