Press Release

VIS Upgrades Entity Ratings of Frontier Foundry Steel (Private) Limited

Karachi, November 01, 2021: VIS Credit Rating Company Limited (VIS) has upgraded the entity ratings of Frontier Foundry Steel (Private) Limited (FFSPL) to ‘A/A-1’ (Single A/A-One) from ‘A-/A-2’ (Single A minus/A-Two). Outlook on the assigned ratings has been revised from ‘Positive’ to ‘Stable’. The medium to long-term rating of ‘A’ denotes good credit quality coupled with adequate protection factors. Moreover, risk factors may vary with possible changes in the economy. The Short Term Rating of ‘A-1’ indicates high certainty of timely payment; excellent liquidity factors supported by good fundamental protection factors and risk factors are minor. The previous rating action was announced on August 25, 2020.

FFPSL is principally involved in manufacturing of billets and rebars with two plants situated in Peshawar and Lahore. Given the increase in steel demand mainly in the latter half of FY21 and Company’s expansion of rebars at Peshawar plant, which also came online in FY21, topline grew notably in FY21. The Company is in process of further expansion - by way of vertical integration - mainly establishing a melting plant for making billets in its Lahore plant that is expected to be concluded by March 2022. The ratings take into account anticipated growth in offtake, which will notably improve the bottom line and resultantly the cash flow coverage indicators.

The ratings incorporate conservative payout policy, given full profit retention in the last five years, as a result of which the equity has growth at a CAGR of 31% since FY18. Going forward, the borrowings are expected to increase while equity will also depict strong growth as payout is projected to remain nil. The gearing ratio is likely to depict marginal increase as of Jun’22, albeit will subsequently drop. Liquidity profile of the Company is supported by adequate cash flows generation in relation to outstanding financial obligations. Leverage indicators are still considered on the lower side vis-à-vis peers. Going forward, the ratings remain dependent on maintaining business & financial risk indicators along with timely conclusion of ongoing expansion.

For further information on this rating announcement, please contact Mr. Arsal Ayub, CFA (Ext. 215) or the undersigned at 021-35311861-70 (Ext. 201) or email at

Javed Callea

VIS Entity Rating Criteria: Corporates (August 2021)

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 2021 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

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