The Pakistan Credit Rating Agency Limited
27-Dec-18
Analyst
Sehar Fatima
sehar.fatima@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
- Methodology | Corporate Ratings | Jun-18
- Methodology | Criteria | Rating Modifier | Jun-18
- Methodology | Correlation Between Long-Term And Short-Term Rating Scale | Jun-18
Related Research
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PACRA Maintains Entity Ratings of Motorway Operations and Rehabilitation Engineering (Private) Limited(MORE)
| Rating Type | Entity | |
|
Current (27-Dec-18 ) |
Previous (01-Jun-18 ) |
|
| Action | Maintain | Maintain |
| Long Term | AA- | AA- |
| Short Term | A1 | A1 |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
MORE - a wholly owned subsidiary of Frontier Works Organization (FWO) - is specifically established for overlay and modernization of Lahore-Islamabad Motorway (M-2). The project is assigned by National Highway Authority on a Build-Operate-Transfer (BOT) basis for 20 years (beginning Apr-14). The construction phase comprised initial two years encompassing overlay and major rehabilitation work which was completed ahead of projected timeline in Aug-16. The business profile of the company is expected to remain strong due to 1) strong revenues emanating from robust traffic volume, 2) toll revenues subject to annual rate increase guaranteed by NHA, 3) income from ancillary services. The financial risk profile is expected to be managed with net cumulative cashflows providing good service coverages. The repayment of debt is comfortably being financed through cashflows emanating from business. The ratings recognize and incorporates strong financial muscle of sponsor.
The ratings are dependent on the sustained realization of projected cash flows. Meanwhile, any material reduction in traffic volumes thereby impacting overall revenues and related cashflows will have negative rating implication.
About
the Entity
Motorway Operations & Rehabilitation Engineering (Private) Limited (MORE) was incorporated on April 11, 2014. MORE’s six members BoD comprises four serving Army officers, one retired and one engineer. The Chief Operating Officer, Brig. Shamim Akram (Retd.), is the key person involved in the management and operational aspects of the project.