Press Release

JCR-VIS Revises Outlook on Medium to Long Term Ratings of Ittehad Chemicals Ltd

Karachi, March 14, 2006: JCR-VIS Credit Rating Company Limited (JCR-VIS) has maintained the medium to long-term ratings of Ittehad Chemicals Ltd (ICL) at A (Single A) and A- (Single A Minus) for the TFC issue and the entity respectively. The outlook on these ratings has been revised from ‘Stable’ to ‘Negative’. The short-term entity rating has also been revised from A-1 (A One) to A-2 (A Two).
While taking this rating action JCR-VIS has taken into account the change in the company’s risk profile arising from an aggressive capital expenditure plan that was primarily debt funded. Although the business plan behind the capital expenditure strategy is well conceived and has already started to yield benefits in terms of profitability, the high level of debt acquired in the process means that cashflow coverages of debt, despite the significant expected increase in cashflows in absolute terms, would not be commensurate to the assigned ratings over the short to medium term unless the capital structure is adequately strengthened. The management is already in the process of issuing preference shares of at least Rs 200m and this would provide some support to the capital structure. JCR-VIS will continue to monitor developments at ICL, particularly with reference to any plans the management may develop over the coming months with regard to further strengthening of the capital structure, and would keep the public informed accordingly.

For further information on this rating announcement, please contact Mr. Safdar Kazi ( / Ext: 221) or Mr. Saad Ahmed Madani ( / Ext: 219) at 5671822/5671833/5680996 or fax to 5681105/5671600.

Saad Ahmed Madani
Group Head
Corporates & Structured Finance

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 2006 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