Press Release

JCR-VIS reaffirms Entity Ratings of Sitara Chemical Industries Limited

Karachi, March 7, 2013: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Sitara Chemical Industries Limited (SCIL) at ‘A+/A-1’ (Single A Plus/A-One). Outlook on the assigned rating is ‘Stable’.

The ratings take into account SCIL’s prominent position in caustic soda sector as evident by largest market share in caustic soda sales. Overall margins of chlor-alkali industry increased during FY12 and 1H13 on account of considerably higher average selling price of caustic soda and related products. The industry has also benefited from initiation of export of caustic soda liquid, mainly to India. Industry-wide capacity utilization improved during 1H13 on account of better availability of gas as compared to corresponding period last year. Capacity utilization and margins of the sector remain vulnerable to power and gas shortages at least in the short to medium term.

SCIL has been able to post healthy earnings for FY12 and on-going year, mainly on account of higher margins of the chemical division. The performance of textile segment remained under stress during FY12; however, margins of the segment are expected to improve in the on-going year that will further augment profitability of the company. Healthy profitability indicators had a positive impact on internal cash generation capacity, which provided considerable support to debt servicing ability of the company. There is some maturity mis-match evident on the company’s balance sheet resulting in low current ratio. The management is considering alternative energy sources to ensure smooth supply of electricity, materialization of which will further streamline operations.

For further information on this rating announcement, please contact Mr. Rashid Zahir at or Mr. Maimoon Rasheed at 042-36610681-84.

Jamal Abbas Zaidi
Deputy CEO

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 2013 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