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Hascol's financial profile has weakened considerably over the last 1 year on the back of sizeable losses incurred resulting in weakening in liquidity profile and risk absorption capacity. This alongwith significant debt funded expansion has adversely impacted the capital structure despite a sizeable equity injection through a recently completed rights issue. Moreover, market share has also declined sharply in 9MFY20 with volumes of Hascol declining by 50% vis-Ã -vis 11% decline in industry volumes during the period. Given the expected volumetric and revenue decline alongwith very thin margins and substantial debts on the book, the debt servicing ability may be impacted.
Rating action also incorporates sharp fall expected in industry volumes (due to partial lockdowns to prevent coronavirus outbreak) which alongwith steep decline in oil prices (resulting in inventory losses) and exchange rate devaluation is expected to adversely impact financial profile of Oil Marketing Companies in the near term. Ratings depend upon and incorporate strategic investment of
For more information, contact:Director Compliance and Rating Analytics,VIS Credit Rating Company LimitedVIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,Phase VII, DHA,
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