Press Release

JCR-VIS assigns initial ratings to Almoiz Industries Limited

Karachi, October 29, 2018: JCR-VIS Credit Rating Company Limited (JCR-VIS) has assigned initial entity ratings of ‘A-/A-2’ (Single A-Minus/A-Two) to Almoiz Industries Limited (AMIL). The medium to long-term rating of ‘A-’ denotes good credit quality with adequate protection factors. Moreover, the risk factors may vary with possible changes in economy. The short-term rating of ‘A-2’ denotes good certainty of timely payment coupled with sound company fundamental and liquidity factors. Outlook on the assigned ratings is ‘Stable’.

The ratings assigned to AMIL incorporate its significant position in a diversified industrial conglomerate, “Almoiz Group of Companies” having business interests in beverage, sugar, steel, power generation and textile. The ratings incorporate sizeable crushing operations at the entity and group level and sugar sales to a group owned beverage company dealing in one of the leading international soft drink brands. In addition, the recent establishment of steel melting and re-rolling plant is likely to support revenue generation given the inherent price volatility in the sugar sector. The maintenance of margins and adequate debt servicing levels would be key rating drivers.

Slump in retail prices impacted the gross margins of the company which declined during HY18. Moreover, financial cost increased due to higher utilization of funding lines in the current period to meet higher working capital requirements. Despite gross sale of de-form bars reported high, the company reported a net loss during HY18. Going forward, the performance of the company will be primarily dependent on the trend in sugar prices though sale of steel bars and electricity is expected to support profitability.

The sizeable growth in leverage and debt levels undertaken to finance stock inventory during the ongoing year is cyclical in nature. The situation is likely to self-correct moderately given the sugar stock held is expected to be sold to customers against which payables are outstanding. Moreover, the government’s recent initiative of allowing export of 1.0m tons of sugar is expected to help in reducing surplus stock and to have positive connotation for the overall industry. The ratings are dependent on projected contribution in overall revenue from steel sales and improvement in margins, gearing and debt coverage.

For further information on this rating announcement, please contact the undersigned at 021-35311861-70 or Mr. Maimoon Rasheed at 042-35723411-13.

Javed Callea

Applicable rating criterion: 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 2018 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