Press Release

VIS Reaffirms Entity Ratings of Thal Power (Private) Limited

Karachi, December 29, 2020: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Thal Power (Private) Limited (TPPL) at ‘AA/A-1+’ (Double A /A-One Plus). The long-term rating of ‘AA’ signifies high credit quality and strong protection factors. Risk is modest but may vary slightly from time to time because of economic conditions. The short-term rating of ‘A-1+’ signifies highest certainty of timely payment; Short term liquidity, including internal operating factors and /or access to alternative sources of funds, is outstanding and safety is just below risk free Government of Pakistan’s short-term obligations. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on December 12, 2019.

The assigned ratings derive strength from the strong sponsor profile of TPPL, which operates as a wholly-owned subsidiary of Thal Limited (THAL). THAL is a diversified national conglomerate engaged in manufacture of engineering products (Karachi), jute products (Muzaffargarh), paper sacks (Hub & Gadoon) and laminated products (Hub); it also holds investments in real estate and energy sectors. TPPL was setup by THAL as a special entity for the purpose of routing its investment in ThalNova Power Thar (Private) Limited (ThalNova). Thal Ltd. owns 26% ordinary shareholding in ThalNova through TPPL.

ThalNova is a joint venture between TPPL, Nova Powergen Ltd (subsidiary of Novatex Ltd), CMEC ThalNova Power Investments Limited (a subsidiary of China Machinery Engineering Corporation) and Hub Power Company Limited to set up a 330 MW mine mouth coal-fired power generation plant located at Thar, Sindh. This power plant will be run on indigenous coal extracted from the mine operated by Sindh Engro Coal Mining Company Limited. The Power Plant is listed under Priority Projects under the China Pakistan Economic Corridor (CPEC). ThalNova achieved its Financial Close on September 30, 2020. The Project is expected to come online in 2022.

As at June 30, 2020, TPPL’s outstanding liabilities included Rs. 1,652.3m due to THAL. This represents an interest free loan received from THAL for purchase of shares of ThalNova. The loan will be converted into share capital based on the progress achieved by ThalNova for its underlying project. Ratings are dependent upon TPPL being wholly-owned by THAL, the unlevered capital structure of TPPL, commitment from TPPL that it will not undertake any debt in future, and that THAL, as a parent company, will be responsible as a shareholder of TPPL.

For further information on this rating announcement, please contact Mr. Narendar Shankar Lal (Ext: 203) or the undersigned (Ext: 306) at (021) 35311861-66 or email at info@vis.com.pk.



Faryal Ahmad Faheem
Deputy CEO

Applicable Rating Criteria: Industrial Corporates (May 2019)
https://s3-us-west-2.amazonaws.com/backupsqlvis/docs/Corporate-Methodology-201904.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 2020 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .