Press Release
VIS Upgrades Entity Ratings of Gharo Solar Limited
Karachi, October 27, 2021: VIS Credit Rating Company Limited (VIS) has upgraded entity ratings of Gharo Solar Limited (GSL) from ‘A-/A-2’ (Single A Minus/A-Two) to ‘A/A-1’ (Single A/A-One). Long Term Rating of ‘A’ reflects good credit quality, adequate protection factors. Risk factors may vary with possible changes in the economy. Short Term Rating of ‘A-1’ indicates high certainty of timely payment; excellent liquidity factors supported by good fundamental protection factors and risk factors are minor. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on August 11, 2020.
Gharo Solar Limited (GSL) operates a 50 Megawatt (MWp) solar-power plant situated in Gharo area, Thatta, Sindh. Commercial Operations Date was achieved in Dec’19 whereby no liquidity damage was levied as the project was completed on schedule and within budget.
Ratings upgrade takes into account GSL’s demonstration of successfully running plant operations since commencement of commercial operations, low business risk and improving financial profile as evident from healthy cash flow generation, sound debt coverage metrics and improvement in leverage indicators. Ratings also take into account the sound sponsors’ profile which comprises local and international players having considerable experience in establishing green-field projects in power and industrial sectors and also operating a portfolio of solar and small hydro power projects. Further, energy purchase agreement of 25 years signed with K-Electric along with guaranteed payments through escrow mechanism mitigates off-take risk and continues to provide comfort to the ratings.
Business risk profile draws support from O&M contract placed with well-reputed contractor, OMS Pvt Ltd, having extensive experience in renewable energy sector. Given the healthy demand and advanced technology employed, the plant operated at higher than required capacity in FY21. Performance of the plant also remained above the NEPRA laid performance parameters and profitability was reported at higher level upon commencement of commercial operations. Overall liquidity profile remains sound on the back of healthy cash flow generation. Leverage indicators depict improvement in the outgoing fiscal year with the repayment of debt and higher profitability.
For further information on this rating announcement, please contact Ms. Sara Ahmed (Ext: 207) or the undersigned (Ext. 306) at 021-35311861-70 or email at info@vis.com.pk
Faryal Ahmad Faheem
Deputy CEO
Applicable Criteria: Industrial Corporates (August 2021)
https://docs.vis.com.pk/docs/CorporateMethodology202108.pdf