Press Release
VIS Upgrades Entity Rating of Almoiz Industries Limited
Karachi, February 01, 2021: VIS Credit Rating Company Limited (VIS) has upgraded the medium to long-term entity rating of Almoiz Industries Limited (AMIL) from ‘A-’ (Single A Minus) to ‘A’ (Single A) while maintaining the short-term rating at A-2 (A-Two). 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-2’ denotes good certainty of timely repayment, sound liquidity factors and good company’s fundamentals. Outlook on the assigned rating has been revised from ‘Rating Watch-Developing’ to ‘Stable’ as AMIL along with two of its group companies have abandoned the plan to acquire controlling stake in a foreign sugar mill. Previous ratings action was announced on February 27, 2020.
AMIL is part of an industrial conglomerate, ‘Almoiz Group’ engaged in the businesses of beverages, sugar, steel, power generation & textile. The company is primarily engaged in manufacturing & sales of sugar, steel deform bars and electricity. The sugar production facility is based on multi-feedstock; the plant can use both sugarcane and beetroot as a raw material to produce sugar. The assigned ratings take into account its moderate business risk profile emanating from inherent cyclicality and price vulnerability of the sugar sector. Net revenue increased marginally during FY20 as the impact of higher selling prices for the key products was largely offset by lower volumetric sales of sugar and molasses. Increase in selling prices of key products positively impacted the bottom-line and resulted in improved gross margins during FY20.
Funds from operations increased in line with profits, resulting in improved coverages. During FY20, the company availed principal deferment under the SBP’s COVID-19 relief program, and mobilized subsidized borrowings. However, with the reduction in overall debt levels and growth in equity base, leverage indicators improved notably by end-FY20. The ratings are sensitive to inherent cyclicality in crop levels and price vulnerability in sugar sector leading to competitive challenges for the company. Going forward, the ratings will be dependent upon maintenance of performance indicators particularly profit margins, debt coverage, and leverage around current levels; any notable deterioration would be considered as a credit negative event.
For further information on this rating announcement, please contact Syed Fahim Haider at 042-35723411-13 (Ext: 8006) or the undersigned at 021-35311861-70 (Ext. 201) or email at info@vis.com.pk
Faryal Faheem Ahmed
Deputy CEO
Applicable rating criterion: Corporates (May 2019)
https://www.vis.com.pk/kc-meth.aspx