Press Release

VIS Revises Ratings of Hascol Petroleum Limited (HPL)

Karachi, April 17, 2020: VIS Credit Rating Company Ltd. (VIS) has revised the entity ratings of Hascol Petroleum Limited (Hascol) to ‘BB+/A-3’ (BB Plus/A-Three) from ‘BBB/A-3’ (Triple B/A-Three). Rating of Hascol’s secured Sukuk issue of Rs. 2billion has also been revised to ‘BBB-’ (Triple B Minus) from BBB+ ((Triple B Plus). Outlook on the assigned ratings continues to be ‘Negative’. The previous rating action was announced on 4th September 2019.

Hascol’s financial profile has weakened considerably over the last 1 year on the back of sizeable losses incurred resulting in weakening in liquidity profile and risk absorption capacity. This alongwith significant debt funded expansion has adversely impacted the capital structure despite a sizeable equity injection through a recently completed rights issue. Moreover, market share has also declined sharply in 9MFY20 with volumes of Hascol declining by 50% vis-à-vis 11% decline in industry volumes during the period. Given the expected volumetric and revenue decline alongwith very thin margins and substantial debts on the book, the debt servicing ability may be impacted.

Rating action also incorporates sharp fall expected in industry volumes (due to partial lockdowns to prevent coronavirus outbreak) which alongwith steep decline in oil prices (resulting in inventory losses) and exchange rate devaluation is expected to adversely impact financial profile of Oil Marketing Companies in the near term. Ratings depend upon and incorporate strategic investment of Vitol Dubai Limited (VDL) in HPL, a significant international player in the oil sector; shareholding of VDL in HPL has increased to 40.8% as at end-January 2020. Continued sponsor support would remain critical given the challenging operating environment.

For further information on this rating announcement, please contact the undersigned (Ext: 306) at (021)35311861-70 or Mr. Talha Iqbal (Ext: 213) fax to (021)35311872-3.

Faryal Ahmad Faheem
Deputy CEO

Applicable Rating Criteria: Oil & Gas Industry (April 2019)
Industrial Corporates (June 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 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