Press Release

VIS Reaffirms Entity Ratings of Gharo Solar Limited

Karachi, September 12, 2023: VIS Credit Rating Company Limited (VIS) has reaffirmed entity ratings of Gharo Solar Limited (GSL) at ‘A/A-1’ (Single A/A-One). The medium to long-term rating of ‘A’ reflects good credit quality, adequate protection factors. Risk factors may vary with possible changes in the economy. The 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 rating is ‘Stable’. Previous rating action was announced on September 06, 2022.

GSL is a public unlisted company engaged in the generation and supply of electricity to K-Electric through a 50 MW solar PV power plant near Gharo, District Thatta, Sindh. The ratings draw comfort from the signed EPA (Energy Purchase Agreement) with K-Electric on ‘take or pay’ provision, valid for 25 years from the commercial operation date (COD) achieved in December, 2019. The plant is a must run under no merit listings due to solar power being a renewable resource. The ROE component of the tariff for the project was determined at 15%. The company has opted for cost-plus tariff structure. The O&M (Operations and Maintenance) operator has a sound track record and extensive experience in renewable energy sector. Both local and international sponsors have considerable experience in solar power projects.

The plant has been performing well above the laid performance parameters and produced a higher output than the benchmark level in each year of operation. While the energy supply to K-Electric remained range bound in FY23, revenue increased on the back of quarterly tariff indexation. Given the company’s inherent business model, margins have remained sound. Despite considerable increase in finance cost on the account of hike in policy rate and higher average borrowings, net profit stood higher due to increase in topline and margins. Despite improved FFO, coverages have remained range bound. Comfort is drawn from the presence of Debt Service Reserve Account for debt repayments wherein GSL has invested excess cash in mutual funds. Consequently, portfolio of short-term investments provides support to the liquidity profile. Gearing and leverage ratios also remained range bound. Profit retention to preserve equity base that commensurate with the relative rating benchmark will remain important, going forward.

For further information on this rating announcement, please contact the undersigned at 021-35311861-64 (Ext. 207) or email at

Sara Ahmed

VIS Entity Rating Criteria: Industrial Corporates (May 2023)

VIS Rating Scale:

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