Press Release
VIS Reaffirms Entity Ratings of Digital World Pakistan (Pvt) Limited
Karachi, July 18, 2025: VIS Credit Rating Company Limited (VIS) reaffirms entity ratings of Digital World Pakistan (Pvt) Limited at ‘A-/A2’ (Single A minus/A two). 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 'A2' indicates Good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Outlook on the assigned ratings remain ‘Stable’. Previous rating action was announced on June 07, 2024.
Digital World Pakistan (Private) Limited (‘DWPL’ or ’the Company’) was incorporated on April 06, 2000. The principal activity of the Company is manufacturing and sale of varied interrelated consumer home electronic products, for the brand ‘Gree’ under a licensing agreement with Chinese principals and DWPL’s own brand ‘Ecostar’. The head office of the Company is situated at 5 Zafar Ali Road, Gulberg-CV, Lahore, Pakistan. Manufacturing facility is located at 35-KM Multan Road, Lahore & W-4-6 Port Qasim, Karachi.
The assigned ratings take into account the medium to high business risk profile of household appliances’ industry characterized by significant exposure to cyclicality and exchange rate fluctuations. Demand is generally tied to per capita income, urbanization, technological advancements, and seasonality, which during FY24 has remained weak. However, signs of recovery emerged, with ease in import restrictions and improvement in macroeconomic conditions since beginning of FY25.
During the review period, DWP Engineering Industries, a related party, was merged with and into DWPL. As a result, capital structure weakened due to addition of long-term debt, which was previously absent. In FY24, topline recovered significantly post ease in import restrictions, while the consolidation impact was limited as the acquired refrigerator segment remained non-operational with weak financials. Margins improved, driven by a focus on high-margin product line - air conditioners, consequently strengthening liquidity and cash flows. This led to recovery in coverages in FY24, which weakened back in 9MFY25 following the higher debt levels post-merger. Maintenance of gearing at manageable levels with improvement in leverage indicator is important to maintain current ratings. Going forward, the ratings are dependent upon expected better macroeconomic conditions to support demand.
For further information on this ratings announcement, please contact on 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria:
Industrial Corporates
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf