PACRA's outlook on Chiniot Power ltd's entity rating turns negative

February 18, 2019 (MLN): Pakistan Credit Rating Agency (PACRA) has maintained the entity ratings of Chiniot Power Limited at ‘A+’ for long term and ‘A1’ for short term. However, the outlook forecast on the rating is ‘negative’ this time while last time it was ‘stable’.

In its official press release on the occasion, PACRA gave a detailed explanation of the company’s operations, financial and otherwise.

It said that the outlook captures the evaporated cushion in the short-term working capital lines, slight dilution in the profitability due to challenges in the sector providing raw material and that CEO is not present in Pakistan for quite some time.

“Receipt pattern from power purchaser, debt repayment behavior and liquidity cushion would impact the directions of rating,” cautioned the agency, indicating that effective execution of plant operations by the in-house O&M team would remain important.

Furthermore, external factors such as any adverse changes in the regulatory framework and weakening of the financial profile of the company owing to delays in cash flow receipts may impact the ratings.

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