Press Release

VIS Reaffirms Entity Ratings of K-Electric Limited

Karachi, January 23, 2025: VIS Credit Rating Company Limited (‘VIS’) has reaffirmed the entity ratings of K-Electric Limited (“KEL” or “the Company”) at AA/A1+ (Double A/ A One Plus). Medium to long term rating of “AA” indicates high credit quality; Protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. Short-term rating of 'A1+' suggests Strongest likelihood of timely repayment of short-term obligations with outstanding liquidity factors. Outlook on the assigned ratings remains Stable. Previous ratings action was announced on June 03, 2024.

K-Electric Limited (‘’KEL’’ or ‘’the Company’’) was incorporated as a limited liability company on September 13, 1913, and its shares are quoted on the Pakistan Stock Exchange Limited (PSX). The registered office of KEL is situated in DHA, Karachi. KEL is principally engaged in the generation, transmission, distribution and supply of electricity to industrial and all other consumers in its licensed areas. KES Power Limited (the Holding Company of KEL), incorporated in the Cayman Islands, holds 66.40% (2022: 66.40%) shares in KEL.

The ratings take note of the approval of the Generation Tariff, with delay in approvals of the individual tariffs filed for Transmission, Distribution and Supply for the period FY24 to FY30 by NEPRA. The complete approval of the MYT (Multi Year Tariff) depends on the approval of all individual tariffs and accordingly, the finalization of Financial Statements post FY23 is dependent on the same as also disclosed by KEL on PSX. As per management, KEL is actively engaged with NEPRA to expedite the regulatory proceedings for the approval of the tariff.

According to the management, the Company’s cash flow position and debt profile have remained stable and are expected to be maintained in the future. Following the finalization of the MYT in alignment with KEL’s future investment plans, an increase in debt levels is anticipated. However, as per management, existing Master Collection Account (MCA) structures, currently used for servicing long-term debt, will continue to ensure timely debt servicing moving forward alongside collections received against electricity sold.

Going forward, the ratings will remain sensitive to the timely finalization of the MYT and its alignment with the Company's investment plans. Maintenance of stable cash flows, debt servicing capabilities, and adherence to financial covenants will remain critical. The sustainability of operational and financial metrics under the evolving regulatory environment would remain important from ratings perspective going forward.

For further information on this ratings announcement, please contact on 021-35311861-64 or email at info@vis.com.pk.











Applicable Rating Criteria:
Industrial Corporates
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2025 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .