Press Release
VIS Reaffirms Entity Ratings of Kompass Pakistan (Pvt.) Limited
Karachi, June 10, 2022: VIS Credit Rating Company Limited (VIS) has reaffirmed entity ratings of Kompass Pakistan (Pvt.) Limited (KPL) at ‘BBB+/A-2’ (Triple B Plus/A-Two) with ‘Positive’ outlook. The medium to long-term rating of ‘BBB+’ denotes adequate credit quality coupled with reasonable protection factors. Moreover, risk factors are considered variable if changes occur in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments coupled with sound liquidity and company fundamentals. Previous rating action was announced on May 7, 2021.
KPL is a family-owned business while the core operations include manufacturing of flexible packaging materials including wrappers, bags and pouches, catering primarily to the Fast-Moving Consumer Goods (FMCG) industry. KPL has a fully integrated packaging facility in which it extrudes polyethylene films and procures Biaxially Oriented Polypropylene Films (BOPP), biaxially-oriented polyethylene terephthalate (BoPET) and Cast unoriented Polypropylene (CPP films) from the local market which are then printed and laminated in accordance with the customer needs.
The ratings incorporate growth in topline on the back of increase in volumetric sales and average selling prices while gross margins remained largely unchanged during FY21. The revenues exhibit upward trajectory in the ongoing year as well. The ratings derive comfort from ability of the company to pass on cost related impact to final customers due to demand dynamics. Liquidity profile is underpinned by adequate current ratio and manageable cash conversion cycle. The company has executed an expansion plan which has primarily been funded through subsidized bank borrowings. Leverage indicators increased by end-HY22 on account of mobilization of both long and short-term borrowings. The ratings will remain dependent on projected improvement in gearing, sales and profitability while maintaining liquidity and coverages within acceptable limits.
For further information on this rating announcement, please contact Ms. Tayyaba Ijaz, CFA at 042-35723411-13 (Ext. 8004) and/or the undersigned at 021-35311861-66 (Ext. 306) or email at info@vis.com.pk
Faryal Ahmad Faheem
Deputy CEO
VIS Entity Rating Criteria: Corporates (August 2021)
https://docs.vis.com.pk/docs/CorporateMethodology202108.pdf