Press Release
VIS Assigns Initial Entity Ratings to Sania Enterprises
Karachi, August 28, 2019: VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘BBB-’/A-3’ (Triple B Minus/A-Three) to Sania Enterprises (SE), a proprietorship concern. The medium to long-term rating of ‘BBB-’ denotes adequate credit quality coupled with reasonable & sufficient protection factors. Moreover, risk factors may vary with possible changes in the economy. The short-term rating of ‘A-3’ denotes timely payment of obligations coupled with satisfactory liquidity and other protection factors. Risk factors are larger and subject to more variation. Outlook on the assigned ratings is ‘Stable’.
SE is primarily engaged in the business of transportation services in Pakistan with a fleet of more than 80 buses and 15 terminals in several cities of the country. The firm generated revenue growth during last three years mainly through increased seat capacity utilization on different routes which impacted profit positively. The firm replaces old buses after completion of 5 years and purchases new ones to maintain quality standards. Since tickets are sold on cash basis, trade receivables continue to remain modest. The firm utilizes long term financial lease for the purchase of new vehicles while working capital requirements are fulfilled from internal cash flows of the firm. Debt leverage and gearing indicators increased during FY18 on account of higher utilization of long term debt while liquidity indicators and coverages remained modest. The ratings are dependent upon maintenance of current capitalization level while any significant drawings can negatively impact the ratings.
For further information on this rating announcement, please contact the undersigned at 021-35311861-70 or Mr. Maimoon Rasheed at 042-35723411-13.
Javed Callea
Advisor
Applicable rating criterion: Corporates (May 2019)
https://www.vis.com.pk/kc-meth.aspx