Press Release

VIS assigns Initial Ratings to Nishat Chunian Power Limited

Karachi, April 06, 2020: VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘A+/A-2’ (Single A Plus/A-Two) to Nishat Chunian Power Limited (NCPL). The medium to long-term rating of ‘A+’ reflects good credit quality, and adequate protection factors. Risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments coupled with sound liquidity and fundamental protection factors. Outlook on the assigned rating is ‘Stable’.
Ratings assigned to NCPL take into demand risk coverage under Power Purchase Agreement signed with CPPA-G (Central Power Purchasing Agency). Moreover, the Implementation Agreement provides sovereign guarantee for cash flows, contingent upon adherence to stipulated performance benchmarks. Ratings draw comfort from NCPL’s association with Nishat Chunian Group; one of the leading groups in Pakistan. Assessment of adequate financial profile entails, sizeable margins, sound debt coverage metrics and healthy cash flows indicating satisfactory debt servicing ability. However, liquidity management remains a concern, given the escalating inter-corporate debt and inconsistent payment cycle exhibited by the power purchaser has led to higher utilization of short-term credit facilities; the same has a sizeable impact on the company’s bottom line on account of high financial cost incurred. Therefore, recovery of outstanding dues is considered essential to ease the pressure on liquidity. The Operations and Maintenance of the company is in-house, the management team has depicted satisfactory performance since FY15. Further, upholding operational performance in line with agreed performance levels would remain a key rating driver. Moreover, the ratings will be revised if there is any change in the PPA.

For further information on this rating announcement, please contact Ms. Maham Qasim (042-35723411-13, Ext. 8005) and/or the undersigned at 021-35311861-66 (Ext. 201) or email at .

Faryal Ahmad Faheem
Deputy CEO

Applicable rating criterion: Corporates (May 2019)

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 .

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