Press Release

VIS Credit Rating Company assigns rating to proposed Islamic Commercial Paper of K-Electric Limited

Karachi, April 5, 2021: VIS Credit Rating Company Limited (VIS) has assigned preliminary rating of A-1+ (Single A One Plus) to K-Electric Limited’s (KE) proposed Islamic Commercial Paper (ICP 17) issue of up to Rs. 3.5billion. The ICP-17 will have bullet repayment at maturity and will have a tenor of 6 months. The proceeds of the issue will be utilized for KE’s working capital requirements.

VIS has assigned entity rating of ‘AA/A-1+’ (Double A/A One Plus) to KE. The assigned ratings recognize the strategic importance of KE, a vertically integrated utility company, that has exclusive distribution rights in its service area i.e. Karachi and adjoining areas of interior Sind and Baluchistan. Business risk profile draws support from growing demand for electricity and continuous improvement across various operational metrics; however, Covid-19 has resulted in various challenges, with additional directives from the Government for power companies, aimed at consumer facilitation. In FY20, the improving trajectory of T&D losses has been affected while growth in unit sent out was also lower than projected. However, later with economic activity revival post Covid-19 lockdown, units billed in H1’FY2021 increased by 5.5% vis-à-vis corresponding period last year. Going forward, based on the planned initiatives, the company remains resolute in recuperating the operational improvements, wherein some improvement has already been noted, with KE posting a net profit in H1’FY2021. Continuity in improvement in various operational performance metrics is considered important from a ratings perspective

For further information on this rating announcement, please contact the undersigned or Mr. Arsal Ayub, CFA (Ext: 213) at 92-21-35311861-70 or fax to 92-21-35311873.



Saeed Khan
Executive Director Finance

Applicable Rating Criteria: Industrial Corporate (May 2019)
https://s3-us-west-2.amazonaws.com/backupsqlvis/docs/Corporate-Methodology-201904.pdf

Rating The Issue (July 2020)
https://s3-us-west-2.amazonaws.com/backupsqlvis/docs/Notchingtheissue202007.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 2021 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .