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The Pakistan Credit Rating Agency Limited
Press Release

Date
26-Dec-19

Analyst
Muhammad Usman
muhammad.usman@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
(26-Dec-19)
Previous
(27-Jun-19)
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 (89.13%) - and its strategic significance as the country's national flag carrier. The Corporation operates on a "One Vessel One Company" 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. Business volumes are a mix of liquid and dry cargo, with liquid cargo bearing a higher weightage. Lately, the Corporation's business volumes with PSO took a dip owing to reduction of furnace oil imports in the country. The foregone share in topline is, however, covered by initiation of white oil transportation projects through expansion of the managed tanker fleet; thereby, two new oil tankers (LR-1) have joined the Corporation’s managed fleet bringing up the total fleet number to eleven (11) and dead-weight tonnage capacity to 831,711DWT – being highest in the history. The Corporation also operates through chartered-hire vessels to stimulate business volumes. PNSC further plans to acquire one more Aframax oil tanker in FY20. Based on the international shipping practices, procurement of ships is 90% financed through external debt. On the other hand, additions in managed fleet are expected to boost up the revenue base and generate better profit margins than from chartered-hire vessels business. This factor, put along with the Corporation's on-balance sheet liquidity, is a support to the overall risk profile.
The ratings are dependent on the Corporation's ability to generate envisaged cash flows post-expansion. Meanwhile, prudent financial discipline alongside growth trajectory is imperative.

About the Entity
PNSC, majority (89.13%) 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 now managing a fleet of eleven vessels, comprising five bulk carriers and six oil tankers, with a total cargo capacity of 831,711DWT.

Mr. Rizwan Ahmed (Federal Secretary - Ministry of Maritime Affairs), is the Chairman and CEO of PNSC. He 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.