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The Pakistan Credit Rating Agency Limited
Press Release

Date
24-Dec-20

Analyst
Anam Waqas Ghayour
anam.waqas@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
(24-Dec-20)
Previous
(26-Dec-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. Revenues emanate from a mixture of liquid and dry cargo, with liquid cargo bearing a higher weightage. Volatility in BDI index due to the impact of COVID-19 affected the bulk trade. The foregone share in topline is, however, covered by liquid trade through expanded tanker fleet; recently, two new oil tankers have joined the Corporation’s managed fleet bringing up the total fleet number to eleven (11) and dead-weight tonnage capacity to 831,711 DWT – being highest in the history. The Corporation also operates through chartered-hire vessels to stimulate business volumes. PNSC is planning to acquire three secondhand vessels, one for each of its business segments within the current fiscal year, namely one Aframax Crude Oil Tanker (105,000 DWT), one LR-1 Product Carrier (75,000 DWT) and one Ultramax Bulk Carrier (63,000 DWT).
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 by their revenue contribution in existing revenue base of 11 vessels. 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 amicable 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. PNSC’s revenue emanates from two sources both from owned and charter vessels; liquid cargo and dry bulk. Dry bulk can further be subdivided into slot charter and bulk cargo. A small proportion of revenue comes from rental income too. Major customer of PNSC are the Oil refineries of the country. Over the years, the contribution from liquid cargo has increased and constitutes the largest share, followed by slot charter and bulk cargo. 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. Shakeel Ahmed Mangnejo is the Chairman and CEO of PNSC. He joined the corporation in Jun’20. As a civil servant, he has been associated with Federal and Sindh governments on various assignments, he has served as Director General, Ports and Shipping, Ministry of Maritime Affairs. He brings with him vast professional experience in administration, finances, management, human resource, criminal administration 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.