The Pakistan Credit Rating Agency Limited
Press Release


Muhammad Mubashir Nazir

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PACRA Maintains Entity Ratings of Motorway Operations and Rehabilitation Engineering (Private) Limited (MORE).

Rating Type Entity
Action Maintain Maintain
Long Term AA AA
Short Term A1+ A1+
Outlook Stable Stable
Rating Watch - -

Motorway Operations & Rehabilitation Engineering (Private) Limited (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. Lahore Islamabad motorway carries strategic importance as it adjoins two capitals. Over the last few operational years, MORE has witnessed consistent hike in traffic volumes and toll rates. Furthermore, rental from service areas are also providing support to profitability. The rating reflects uplift in financial profile, standalone profitability, support from rentals and investment income. Payments to NHA, as per the agreement, are being done through cash flows emanating from business. The management is staggering payments therein. The financial risk matrix has witnessed significant improvement with reduced leveraging by timely repayment of debt. Pressure of robust liquidity on the balance sheet brings additional comfort. Since traffic flow is directly linked with the revenue generation, which under Covid-19, came under stress, as the pandemic-induced slow down translated in lesser commercial traffic, thus affecting toll collection. Financial performance after the ease of lock down has depicted improvement, as economic growth picked pace. Accordingly, the cash flow coverage indicators are expected to be in comfortable zone. Going forward, the growth in traffic volumes and revenue are considered important from rating perspective.
The ratings recognize and incorporates strong financial muscle of sponsor and the explicit guarantee in place for debt repayments of MORE. Significant liquidity is lying on balance sheet, though net of relevant liabilities, is minuscule.

About the Entity
Motorway Operations & Rehabilitation Engineering (Private) Limited (MORE) was incorporated on April 11, 2014. MORE’s Board of Directors consists of three FWO nominated serving army officers and one retired engineer army officer. Three board members are senior executives of FWO. The Director General FWO – Maj Gen Kamal Azfar – also designated as Chairman MORE, supervises all FWO projects. The CEO, Brig. Atif Majeed, reports to the Chairman MORE. Mr. Farhan joined the Company as Chief Financial Officer of MORE, after the resignation of Mr. Shaikh M. Khurshid Alam who was associated with the Company as Chief Financial Officer since Jan-17.

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.