Press Release

VIS assigns rating to Islamic Commercial Paper of K-Electric Limited

Karachi, March 24, 2020: VIS Credit Rating Company Limited (VIS) has assigned preliminary rating of A-1+ (Single A One Plus) to K-Electric Limited’s (KE) proposed Islamic Commercial Paper (ICP-8) issue of up to Rs. 3.5billion. The ICP-8 will have a tenor of 6 months which will be utilized for funding KE’s working capital requirements.

KE has been assigned entity rating of AA/A-1+ (Double A/A-One Plus). The assigned rating recognize the strategic importance of KE, a vertically integrated utility company, that has exclusive distribution rights in its service area i.e. Karachi and adjoining areas of Sind and Baluchistan. Business risk profile draws support from growing demand for electricity and continuous improvement across various operational metrics including reduction in transmission & distribution and aggregate technical and commercial losses. Overall financial profile is expected to remain adequate during the rating horizon. With the NEPRA’s determination of monthly FCA for the period July 2016 to June 2019 and quarterly tariff variations for the period July 2016 to March 2019, working capital cycle of the Company is expected to improve. Audited financial statements of the Company are expected to be finalized in the ongoing month.

Given the decline in tariff, EBITDA is expected to be lower vis-à-vis historical levels in the earlier years. However, EBITDA is projected to depict healthy growth over the MYT period on the back of higher units sent out and continuous reduction in T&D losses which is expected to beat NEPRA benchmark in later years. Quantum of improvement in EBITDA and profitability will depend on growth in units sent out, extent of reduction in T&D losses vis-à-vis NEPRA benchmark, amount of write-off claims and upward revision in MYT during mid-term review. While remaining within manageable levels, leverage indicators have continued to trend upwards. Debt servicing coverage ratio is expected to decline but remain comfortable over the rating horizon.

For further information on this rating announcement, please contact Mr. Talha Iqbal (Ext: 213) or the undersigned (Ext. 201) at 021-35311861-70 or email at

Javed Callea

Applicable Rating Criteria: Industrial Corporates - April 2019

Rating The Issue (September 2014)

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2020 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

VIS Credit Rating Company Limited