Press Release

VIS Maintains Entity Ratings of Sitara Chemical Industries Limited

Karachi, November 08, 2019: VIS Credit Rating Company Limited (VIS) has maintained the entity ratings of Sitara Chemical Industries Limited (SCIL) at ‘A+/A-1’ (Single A Plus/A-One). Outlook on the assigned ratings has been revised from ‘Positive’ to ‘Stable’. The medium to long-term rating of ‘A+’ signifies good credit quality with strong protection factors. Moreover, risk factors may vary with possible changes in economy. The short-term rating of ‘A-1’ denotes high certainty of timely payments coupled with excellent liquidity and supported by good fundamental protection factors. The previous rating action was announced on November 14, 2018.

The ratings assigned to SCIL take into account its leading position in chlor-alkali sector and strong sponsor profile. The ratings draw comfort from increasing revenues and largely sustained gross margins despite economic slowdown. Moreover, sound coverages and comfortable gearing levels provide strength to the ratings. Meanwhile, the management’s focus on improving operational efficiencies through BMR and planned diversification in revenue stream is expected to bode well for the company. However, the industry is faced with crucial challenges in terms of slack demand for caustic soda, increasing power related costs amidst higher interest rate scenario. The revision in the outlook reflects weakening in macroeconomic indicators and its resultant impact on industry dynamics, which may affect the company’s performance over the rating horizon.

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: Corporates (May 2019)

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