Press Release
VIS Upgrades Entity Ratings of Procon Engineering (Private) Limited
Karachi, July 18, 2025: VIS Credit Rating Company Limited (VIS) has upgraded the entity ratings of Procon Engineering (Pvt.) Limited (‘PEPL’ or ‘the Company’) from ‘A/A2’ (Single A/A Two) to ‘A+/A1’ (Single A plus/A One). Medium to long term rating of 'A+' indicates good credit quality; Protection factors are adequate. Risk factors may vary with possible changes in the economy. Short term rating of 'A1' signifies strong likelihood of timely repayment of short-term obligations with excellent short-term liquidity factors. Outlook on the assigned rating is ‘Stable’. Previous rating action was announced on May 22, 2024.
PEPL is engaged in the manufacture of automotive seats for passenger and commercial vehicles, auto parts including cargo deck, chassis frame, and sheet metal/body parts and has also diversified into foam and synthetic (F&S) products. The ratings derive comfort from the strong sponsorship profile of the Master Group, one of the country’s leading business conglomerates with diversified presence across various business sectors including mattresses, textile, automobiles and energy.
The assigned ratings incorporate the ongoing recovery in the automotive sector and sustained demand from OEMs, underpinned by improving macroeconomic fundamentals. Despite the inherently high business risk of the sector, driven by the cyclical nature of the automobile industry and its resulting impact on the topline and profitability of auto-parts manufacturers, the Company has effectively mitigated this risk by expanding its presence in the non-OEM segment. This segment accounted for over 48% of total revenue in 1HFY25 (FY24: 50%, FY23: 42%, FY22: 24%), reflecting the success of its diversification strategy aimed at supporting long-term profitability. Additionally, within the OEM space, PEPL has broadened its client base by onboarding new Korean and Chinese manufacturers.
The ratings also reflect the Company’s improved capitalization profile over time, driven by reduced reliance on bank borrowings, sponsors working capital support, and consistent equity growth. Liquidity has remained satisfactory, with notable improvements in cash flow generation and debt coverage metrics. Looking ahead, the ratings remain supported by the continued availability of interest-free loans from the directors, reflecting an ongoing funding commitment, alongside the Company’s intent to maintain a conservative capitalization strategy.
For further information on this ratings announcement, please contact at 021-35311861-64 or email at info@vis.com.pk
Applicable Rating Criteria: Corporates:
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf