Press Release

JCR-VIS Reaffirms entity ratings of Ittehad Chemicals Limited

Karachi, December 20, 2016: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity rating of Ittehad Chemicals Limited (ICL) at ‘A-/A-2’ (Single A Minus/ A-Two). Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on December 22, 2015.

Ratings assigned to ICL take into account its prominent position in the chlor-alkali sector which has remained largely stable in the recent years. Operating profits have depicted improvement during the outgoing year on account of higher volumetric sales, improved product prices, better supply of cheaper sources of electricity (gas) and shift in production on more fuel efficient IEM technology.

In the recent years, ICL’s focus remained on implementing production related operational efficiencies. With commencement of IEM-II plant (Phase 2) in Sep’16, production has been completely shifted to power efficient membrane technology. During the ongoing year, ICL plans to replace IEM-I plant with IEM-III plant is expected to further improve operational efficiencies.

The impact of increased borrowings on gearing levels was mitigated through right share issuance and improved profitability. Additional borrowing is planned to partially finance the capital outlay for IEM-3 while remaining funding will be arranged through equity. Maintaining adequate cash flow coverage which commensurate with the assigned ratings over the short to medium term will remain critical.

For further information on this rating announcement, please contact the undersigned at 021-35311861-70 (Ext. 208) or Mr. Waqas Munir, FRM at 042-35723411-13 (Ext. 8010).

Mohammed Khalid Ali

Applicable Rating Criteria: Industrial Corporates (May 2016)

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 not an NRSRO and its credit ratings are not NRSRO credit ratings.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 2016 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.

JCR-VIS Credit Rating Company Limited