Press Release

JCR-VIS Reaffirms entity ratings of Ittehad Chemicals Limited

Karachi, December 22, 2015: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the medium to long-term entity rating of Ittehad Chemicals Limited (ICL) at ‘A-’ (Single A Minus) and short-term entity rating at ‘A-2’ (A-Two). Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on December 22, 2014.

Ratings assigned to ICL take into account competitive nature of the chlor-alkali sector where volatility in prices and margins has been experienced over the past few years on account of overcapacity. Operational efficiency of the plant is expected to improve significantly with the conversion on less fuel intensive IEM technology alongwith up-gradation of captive power plant; impact of these initiatives on operating performance is expected to be more visible from the ongoing year. Ratings also take into account moderate financial risk profile of the institution.

Over the last five years, sales of the company have largely remained stable. Deployment of more economical production process and energy sources would support margins, going forward. Nevertheless, moderate capacity utilization levels would have their effect.

Given increase in borrowings to fund CAPEX requirements, gearing of ICL have increased in the recent years. Additional borrowing is planned to partially finance the capital outlay for IEM-2 (Phase 2) while remaining funding has been arranged through issuance of right shares. Cash management would hold the key to debt servicing performance, going forward.

For further information on this rating announcement, please contact the undersigned at 021-35311861-70 (10 lines) or Mr. Maimoon Rasheed at 042-35723411-13.

Faheem Ahmed
President & CEO

Applicable Rating Criteria: Industrial Corporates (October 2003)

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 2015 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