Press Release

VIS Assigns Initial Entity Ratings to Mehboob Steel Pipe Industry

Karachi, Aug 27, 2019: VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘BBB-’/A-2’ (Triple B Minus/A-Two) to Mehboob Steel Pipe Industry (MSPI). 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-2’ denotes good certainty of timely repayment, sound liquidity factors and good company’s fundamentals. Outlook on the assigned ratings is ‘Stable’.

MSPI manufactures MS Steel tubes and pipes for various industries with annual production capacity of 60,000 metric tons per annum. Shareholding of the firm is mainly vested with the sponsoring family of four real brothers which are actively involved in the day to day affairs of the company. The firm generates 100% sales through local customers while the sales growth during last three years was based on volumetric increase while gross margins were also impacted positively. The firm has no plan of CAPEX in near future as capacity utilization remains around 50% and any sales increase can be accommodated by the existing capacity. Trade receivables of the firm increased during FY18 as about 75% of the products are now sold on credit basis of 30 days credit period while the remaining are sold on a cash basis. The firm relies on short term borrowings for working capital requirements while there is no long term loan availed by the firm. Leverage & gearing ratios improved during FY18 while liquidity indicators & coverages have remained modest. The ratings are dependent on continuation of existing partnership concern along with sustained maintenance of overall financial indicators.

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

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 August 27, 2019 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.