PACRA Maintains Entity Ratings of Pakistan International Bulk Terminal Limited (28-08-2019)

Lahore, August 28, 2019 (PPI-OT): The ratings draw strength from the Pakistan International Bulk Terminal Limited’s (PIBT) distinguished position in its operating segment. The company operates on a “build, operate and transfer” (BOT) model at Port Qasim Authority for the provision of terminal handling services for Coal, Clinker and Cement. Major demand, therefore, vests in the domestic cement landscape followed by power producers that are dependent on imported coal. Sponsors’ extensive association with the related business “Marine Group of Companies” is a consideration. With a fully mechanized infrastructure, the company’s annual capacity hovers around 12 million MT for inbound coal handling and 4 million MT of outbound clinker and cement handling.

Lately, reduced competition in the market has reaped benefits to the company in enhancing its business volumes speedily. Changing demand dynamics for imported coal as the government’s initiatives towards indigenous coal-based power plants and reinstigated competition are, however, critical to the business prospects. The company’s financial risk profile is reflective of its initial years of operations, depicting an uptick in business volumes but losses at the bottom-line level. The pricing structure provides an inbuilt hedge against foreign obligations. The capital structure remains comfortable despite hefty long term borrowings to fund CAPEX, duly cushioned by equity enhancements on a timely basis.

The ratings are dependent upon upholding of strong business profile amidst unforeseen changes in the competitive landscape, company’s ability to improve its margins and profitability. Optimal utilization of the capacity and improvement in margins is considered important. Self-sufficiency in meeting debt obligations is the key factor, which may be supplemented by extended support if need be. Excessive borrowings and/or downturn in margins would impact the ratings.

For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com