Press Release

VIS Reaffirms Ratings of Lahore Sialkot Motorway Infrastructure Management (Private) Limited

Karachi, November 14, 2022: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Sialkot Motorway Infrastructure Management (Private) Limited (LSMIM) at ‘A-/A-2’ (Single A minus/A-Two). The medium to long-term rating of ‘A-’ denotes good credit quality coupled with adequate protection factors. Moreover, risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payment coupled with sound company fundamentals and liquidity factors. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on October 07, 2021.

The ratings assigned to LSMIM take into account the sound financial profile of its two sponsors; the shareholding is vested with Frontier Works Organization (FWO) (Class A shares) and National Highway Authority (NHA) (Class B shares) with both having sizable experience in infrastructure projects. FWO has undertaken major projects under public private partnership (PPP) and Build-Operate-Transfer (BOT) mandates. Ratings also take into account change in (Operations and Maintenance) O&M contractor where responsibility has been transferred from FWO to LSMIM since September’21. The assigned ratings take comfort from presence of Finance Payment Account (FPA) with an amount equal to next debt repayment installment replenished two days before due date of repayment. With losses being incurred on LSMIM books, the responsibility of FPA funding rests with the sponsor evident from subordinated loan received in FY22 for debt repayment. For the same, a Letter of Comfort is being provided by the sponsors which provides an irrevocable and unconditional guarantee to the financiers for meeting shortfall of the debt principal and markup payments till maximum required amount collected in the FPA or the financing termination date, whichever comes earlier. Since, the company has utilized maximum allowable financing lines from financing institutions, the remaining EPC cost requirement will also be met by FWO as a subordinated loan, as per concession agreement.

Ratings incorporate the project’s low leveraged financial plan, its completion status of 97% and it being operational since March 2020. Ratings note shortfall in actual revenues from projected stemming from the route being an alternate route and lower traffic due to high fuel costs. Non-availability of certain land from NHA, the owner, of concession area, and consequential incomplete construction works at Sambrial Interchange and certain part of service areas continue to impact the ratings. In case of unprecedented scenarios involving downward revision of toll rates, the revenue risk is accounted for as LSMIM is guaranteed to receive compensation from NHA for the loss in revenues. The indigenous liquidity profile of the company remains weak in line with negative coverages; however, the same is mitigated at varying levels in line with support extended by sponsors. Going forward, ratings, in addition to the above commitments of FWO, also remain dependent on successful achievement of COD in stipulated time. Further, traffic volumes following COD and the maintenance of DSCR at certain level as specified in concession agreement, are imperative to the assigned ratings.

For further information on this rating announcement, please contact Ms. Asfia Aziz (Ext. 212) and/or the undersigned (201) at 021-35311861-66 (Ext. 306) or email at

Javed Callea

Applicable rating criterion: Corporates (August 2021)

VIS Rating Criteria: Toll Roads (August 2020)

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 2022 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .