PACRA Maintains Entity Ratings of Kohinoor Energy Limited

Lahore, December 22, 2017 (PPI-OT):The ratings of KEL reflect its stable business profile emanating from a secured regulatory structure. This entails sovereign guaranteed revenues and cash flows, given adherence to agreed performance benchmarks. KEL continues to meet its availability (88%) and efficiency (45%) benchmarks – an outcome of technically sound O and M team, robust systems and controls, and strong governance structure. Company’s efficiency gains are intact, increasing fuel prices bodes well with the bottom line. The management is also making efforts to squeeze its cost structure. Along with regular O and M, which is already taken care by KEL’s own team, major maintenance has also been carried out by in-house O and M team. This has brought slight uptick to business margins reflected in better profitability during FY17.

Meanwhile, the company continues to enjoy sound coverages. However, its financial profile is still highly dependent on the behaviour of the power purchaser. The ratings continue to take comfort from KEL’s association with strong business conglomerates – Toyota Tsusho Corporation and Saigol Group.

Although well-managed, in-house O and M activities expose the company to operational risk; thus upholding strong operational performance in line with agreed performance levels would remain a key driver of the ratings. Meanwhile, any significant accumulation in receivables, thereby impacting the financial profile of the company may have negative effects.

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

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