Press Release

JCR-VIS Assigns Initial Entity Ratings to Kompass Pakistan (Pvt) Limited

Karachi, February 1, 2019: JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has assigned initial entity ratings of ‘BBB+’/A-2’ (Triple B Plus/A-Two) to Kompass Pakistan (Pvt) Limited (KPL). The long term rating of ‘BBB+’ signifies adequate credit quality with reasonable protection factors. Risk factors are considered variable if changes occur in the economy. Short term rating of ‘A-2’ depicts good certainty of timely payment. Liquidity factors and company fundamentals are sound with good access to capital markets. Risk factors are small. Outlook on the assigned ratings is ‘Stable’.

The assigned ratings incorporate KPL’s significant market position in the local packaging industry along with a diversified product portfolio. The company exhibits a moderate business risk which is evident from its relatively stable customer profile comprising entities from oil & ghee industry, FMCGs and food & beverages sector.

Assessment of financial risk profile incorporates moderate profitability indicators, adequate liquidity profile, and high leverage indicators. Profitability of the company witnessed decline on the back of increase in cost of raw materials in line with currency depreciation and volatile crude oil prices. Assigned ratings remain dependent on achievement of management’s projected capitalization and cash flow levels. Debt profile of the company comprises short term borrowings while the remaining is contributed by long term debt from both local and foreign entities; leverage indicators of the company are considered on the higher side in comparison to peers. Given the current foreign exchange environment, ratings are constrained by its potential impact on KPL’s cost and financing structure of the company. Liquidity profile of the company is considered adequate given moderate cash flows in relation to outstanding obligations.

For further information on this rating announcement, please contact Ms. Muniba Khan (Ext: 215) or the undersigned (Ext: 201) at 021-35311861-71 or fax to 021-35311872-3.

Javed Callea
Advisor

Applicable Rating Criteria: Industrial Corporates (May 2016)
http://www.jcrvis.com.pk/docs/Corporate-Methodology-201605.pdf

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 February 02, 2019 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.