The Pakistan Credit Rating Agency Limited
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Raniya Tanawar

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PACRA Maintains Entity Ratings of Pakistan National Shipping Corporation

Rating Type Entity
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. 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 corporation's governance body has undergone considerable changes. Beginning FY18 and onward, business volumes from PSO continue to face contraction on the backdrop of reduction in furnace oil imports. Currently, the corporation operates through a fleet of managed and chartered-hire vessels to stimulate business volumes. Keeping an aim to embark by emerging into "white oil" import, 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 to 831,711DWT – highest in history. PNSC further plans to acquire more vessels in coming year. As per Corporation’s plan, the expansion is majorly financed through debt; thus heaping the leveraging levels, however, these additions 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 corporation.
The ratings are dependent on the Corporation's ability to generate envisaged cash flows post-expansion. Meanwhile, in view of the significant interest rate hike, any change in debt matrix will stress the financial risk profile.

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 831,711 DWT.

Mr. Rizwan Ahmed, the Chairman and CEO of PNSC, joined the Corporation in Dec'17, now, he is also the Federal Secretary - Ministry of Maritime Affairs. 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.