Press Release

JCR-VIS Assigns Initial Ratings to Fast Cables Limited
 

Karachi, December 28, 2018: JCR-VIS Credit Rating Company Limited (JCR-VIS) has assigned initial entity ratings of ‘A-/A-2’ (A Minus / A Two) to Fast Cables Limited (FCL). Outlook on the assigned ratings is ‘Stable’. The long term rating of ‘A-’ signifies good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. The short term rating of ‘A-2’ signifies good certainty of timely payment. Liquidity factors and company fundamentals are sound. Access to capital markets is good. Risk factors are small.

The assigned ratings incorporate growth in FCL’s market position over past three fiscal years along with adequate liquidity and capitalization indicators. Ratings also factor in presence of experienced management team, satisfactory internal controls and information technology infrastructure. However, in line with best practices, board composition (through increasing board size and inclusion of independent directors) has room for improvement. Going forward, ratings will remain dependent on maintaining cash flow coverage and leverage indicators within communicated benchmarks while achieving projected business growth and margins.

Pakistani wiring & cable industry is characterized by significant competitive intensity with existence of several large players, numerous small unorganized firms along with notable competition from Chinese imports and risk of inventory loss in view of volatility in metal prices. Business risk profile is supported by stable and growing demand for wires & cables in the country from housing, energy, automotive, construction and other segments. Business to business segment is exposed to competition from Chinese imports while retail sales face competition from informal manufacturers operating domestically and internationally. Going forward, JCR-VIS expects demand growth to slow down in the short-term in line with slower economic growth in the backdrop of increasing interest rates and sizeable current account deficit.

Net sales have increased at a healthy Compound Annual Growth Rate of 40% over past four fiscal years; this, along with increase in margins and controlled expenses led to improvement in operating profit. Sizeable taxation, however, led to relatively slower growth in profit after tax. Liquidity profile draws support from adequate cash flows in relation to outstanding obligations. Short term borrowing is utilized to fund inventory while leverage indicators have increased on a timeline basis although standing at manageable levels. The company is undertaking efficiency enhancement projects in order to improve margins and profitability.


For further information on this rating announcement, please contact Mr. Jamal Abbas Zaidi (Ext: 207) at 021-35311861-71 or fax to 021-35311872-3.


Javed Callea
Advisor

Applicable Rating Criteria: Industrial Corporates (May 2016)
http://www.jcrvis.com.pk/docs/Corporate-Methodology-201605.pdf

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Information herein was obtained from sources believed to be accurate and reliable; however, JCR-VIS Credit Rating Company Limited (JCR-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. JCR-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. JCR-VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings. JCR-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 JCR-VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to JCR-VIS.

JCR-VIS Credit Rating Company Limited