Press Release

VIS assigns ‘BBB-/A-2’ initial ratings to Agro Steel Industry
 

Karachi, April 9, 2020: VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘BBB-/A-2’ (Triple B Minus/A-Two) to Agro Steel Industry (ASI). The medium to long-term rating of ‘BBB-’ denotes adequate credit quality with reasonable and sufficient protection factors. Moreover, risk factors are considered variable with possible changes in economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments coupled with sound liquidity and fundamental protection factors. Outlook on the assigned rating is ‘Stable’.

ASI is a small-sized manufacturing and trading concern; managed and owned by family members. The ratings assigned take into account sustained profitability, supported by a steady demand of high carbon steel products in the local market. Sustained margins, adequate liquidity and low leverage indicators provide support to the financial profile and are among the key ratings drivers. However, the ratings are constrained by limited scale of operations, presence of the firm in a sector characterized by steady, though limited demand, and small equity base. Furthermore, partnership structure implies additional element of volatility in the capital structure. The ratings also incorporate possible impact of currency fluctuation on the prices of imported raw material and any adverse changes in regulatory duties.


With the advent of coronavirus pandemic, leading to demand compression emerging from ongoing global crisis and continued lockdowns, has impacted various industries, while the full impact of which is yet uncertain. Hence, the ratings are dependent upon maintenance of financial parameters at an adequate level and any adverse change in the same will trigger a rating review.


For further information on this rating announcement, please contact Ms. Tayyaba Ijaz at 042-35723411-13 (Ext. 8004) and/or the undersigned at 021-35311861-66 (Ext. 306) or email at info@vis.com.pk


Faryal Ahmad Faheem
Deputy CEO


Applicable rating criterion: Corporates (May 2019)

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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 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 2020 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

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