Press Release

VIS Assigns Initial Entity Ratings to Indus Motor Company Limited

Karachi, June 17, 2019: VIS Credit Rating Company Limited has assigned initial entity ratings of ‘AA+/A-1+’ (Double A Plus/A-One Plus) to Indus Motor Company Limited (IMC). The medium to long-term rating of ‘AA+’ signifies high credit quality; Protection factors are strong. Risk is moderate but may vary slightly from time to time because of economic changes. The short-term rating of ‘A-1+’ signifies high certainty of timely payments; short-term liquidity including internal operating factors and/or access to alternative sources of funds is outstanding and safety is just below risk free Government of Pakistan’s short term obligations. Outlook on the assigned rating is ‘Stable’.

The assigned ratings to IMC reflect its competitive position in local auto manufacturing industry, robust financial profile and sound business risk profile. Ratings also incorporate Company’s strong sponsor profile and ongoing efforts to enhance product competitiveness and strengthen operating performance. Ratings remain dependent on maintaining robust financial profile through business cycles and low leveraged capital structure.

Business risk profile is considered sound given solid franchise and strong competitive position in the product segment that the company operates. Strong dealer network and declining trend in imported car sales support business risk profile. Efforts to reduce exposure to currency fluctuation through increasing localization have limited margin attrition vis-à-vis historical levels. Some cyclicality in sales due to slow down in GDP growth and frequent policy changes are key business risk factors. Assessment of financial risk profile incorporates IMC’s strong leverage free balance sheet, robust profitability and abundant liquidity, elements that provide the company with financial flexibility and support its rating. Overall corporate governance framework is supported by strong financial planning process and sound internal control systems in place. Detailed disclosures in annual report reflect focus on transparency and disclosures.

For further information on this rating announcement, please contact Mr. Talha Iqbal (Ext: 213) or the undersigned (Ext: 201) at 021-35311861-71 or fax to 021-35311872

Javed Callea

Applicable Rating Criteria: 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 2019 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

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