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The Pakistan Credit Rating Agency Limited
Press Release

Date
27-Dec-18

Analyst
Raniya Tanawar
raniya.tanawar@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Entity Ratings of Pakistan National Shipping Corporation

Rating Type Entity
Current
(27-Dec-18)
Previous
(29-Jun-18)
Action Maintain Maintain
Long Term AA AA
Short Term A1+ A1+
Outlook Stable Stable
Rating Watch - -

The ratings reflect PNSC's strong ownership - majority owned by the Government of Pakistan (~87.3%) - and its strategic significance as the country's flag carrier. On a stand-alone basis, PNSC’s business profile has gained significant strength in recent years on account of efficient fleet utilization and cost management measures taken by the management. The company's governance body has undergone considerable changes. Business volumes beginning FY18 have witnessed a contraction on the backdrop of the reduction in furnace oil imports. Additionally, this has impacted the company's revenue from the Pakistan State Oil (PSO). Currently, the company operates through a fleet of managed and chartered-hire vessels to stimulate business volumes. It now embarks on emerging into "white oil" import with an aim of increasing its owned fleet size, by acquisition of three (3) more vessels. The expansion would majorly be financed through debt; thus leveraging is expected to go high, however, this would also boost up the revenue base and is likely to generate higher margins than that currently emanating from chartered-hire vessels. This, along-with on-balance sheet liquidity, supports the overall risk profile of the company.

The ratings are dependent on the Corporation's ability to generate envisaged cash flows post-expansion. Meanwhile, any change in debt matrix stressing the financial risk profile may have a negative impact on the ratings.

About the Entity
PNSC, majority (~87.3%) owned by the Government of Pakistan (GoP) through Ministry of Maritime Affairs, functions as a holding company with 19 wholly owned subsidiaries and an associate. PNSC group, operating on a one-ship one-company model, is principally engaged in transportation of liquid cargo and dry cargo including slot chartering and bulk-cargo, catered through charter-hire arrangements and owned vessels. The Corporation is currently managing a fleet of nine vessels, comprising five bulk carriers and four oil tankers with a total carriage capacity of 681,806 DWT.

Mr. Rizwan Ahmed, the Chairman and CEO of PNSC, joined the Corporation in Dec'17. He has worked on various key positions in the federal and provincial governments. He brings with him vast professional experience in administration, finances, management, human resource, law enforcement and public procurement. He is supported by a team of experienced individuals having long association with the Corporation.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.