The Pakistan Credit Rating Agency Limited
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Muhammad Usman

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PACRA Maintains Entity Ratings of Pakistan International Bulk Terminal Limited

Rating Type Entity
(28-Aug-19 )
(01-Mar-19 )
Action Maintain Initial
Long Term A- A-
Short Term A2 A2
Outlook Stable Stable
Rating Watch - -

The ratings draw strength from the Pakistan International Bulk Terminal Limited's (PIBT) distinguished position in its operating segment. The company operates on a "build, operate and transfer" (BOT) model at Port Qasim Authority for the provision of terminal handling services for Coal, Clinker and Cement. Major demand, therefore, vests in the domestic cement landscape followed by power producers that are dependent on imported coal. Sponsors' extensive association with the related business "Marine Group of Companies" is a consideration. With a fully mechanized infrastructure, the company's annual capacity hovers around 12 million MT for inbound coal handling and 4 million MT of outbound clinker and cement handling. Lately, reduced competition in the market has reaped benefits to the company in enhancing its business volumes speedily. Changing demand dynamics for imported coal as the government's initiatives towards indigenous coal-based power plants and reinstigated competition are, however, critical to the business prospects. The company's financial risk profile is reflective of its initial years of operations, depicting an uptick in business volumes but losses at the bottom-line level. The pricing structure provides an inbuilt hedge against foreign obligations. The capital structure remains comfortable despite hefty long term borrowings to fund CAPEX, duly cushioned by equity enhancements on a timely basis.
The ratings are dependent upon upholding of strong business profile amidst unforeseen changes in the competitive landscape, company’s ability to improve its margins and profitability. Optimal utilization of the capacity and improvement in margins is considered important. Self-sufficiency in meeting debt obligations is the key factor, which may be supplemented by extended support if need be. Excessive borrowings and/or downturn in margins would impact the ratings.

About the Entity
Pakistan International Bulk Terminal Limited (PIBT) was incorporated in November 2010, under the Build, Operate and Transfer (BOT) Contract with Port Qasim Authority for the construction, development, operations and management of a coal and clinker/cement terminal for a period of 30 years. The company got listed on the Pakistan Stock Exchange in 2013 and commenced its commercial operations from July 3, 2017.

Ownership of the company vests with Premier Mercantile Services (Pvt.) Limited (PMS) (~43%), which is the flagship Company of the "Marine group of Companies" acting as an Investment arm. Other major shareholders include Jahangir Siddiqui & Company Limited (~10%) and International Finance Corporation (IFC) (~11%). Mr. Haleem Ahmed Siddiqui is the Chairman of the Board. He, along with his family, collectively own PMS. Mr. Haleem Siddqui has over ~50 years of experience in marine-related services. He joined Pakistan Merchant Navy in 1959 and commanded various vessels till 1971. He was also the founding Chairman of Pakistan International Container Terminal (PICT). Mr. Sharique Azim Siddiqui is the CEO of PIBT. He is assisted by a team of qualified professionals.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.