Press Release

VIS Reaffirms Entity Ratings of Power Cement Limited

Lahore, December 27, 2023: VIS Credit Rating Company Limited (VIS) has reaffirmed entity ratings of Power Cement Limited (PCL or ‘the Company’) at ‘A-/A-2’ (Single A Minus/A-Two). Long-term rating of ‘A-’ reflects good credit quality; protection factors are adequate and risk factors may vary with possible changes in the economy. Short-term rating of ‘A-2’ signifies good certainty of timely payment. Liquidity factors and company fundamentals are sound; good access to capital markets and risk factors are small. Outlook on the assigned ratings is 'Stable'. Previous rating action was announced on December 30, 2022.
The ratings assigned to PCL take into account the elevated business risk profile of the cement industry given slow growth in economy dampening local market demand resulting in lower utilization of capacity reported by the Company. However, ratings hinge on the exhibited and projected funded support of the Arif Habib Group. The standalone rating has been adjusted to account for consistent explicit support received from the sponsor coupled with implicit understanding of provision of financial assistance in case the Company fails to service debt obligations. The ratings also derive comfort from cost-optimization strategies implemented (waste heat recovery system and solar power plant) and under implementation (setting up of wind power plant). Successful materialization of targets and sustained efficiency of the initiatives in cost-rationalization will remain imperative for ratings going forward.
Revenue growth is driven by price increase along with higher export volumes and cost rationalization favorably impacted margins; hence, the market share remained intact. Nevertheless, sizable jump in financial expense on borrowings translated into a continued loss before taxation. Although funds from operations turned positive during the outgoing year on account of reduction in quantum of loss, the debt service coverage continues to remain under pressure. The ratings consider the financial support provided by the sponsors in FY22 to address the debt repayment shortfall, which has aided in facilitating the restructuring process in FY23 for the local lenders.
Moreover, the gearing and leverage indicators trended upwards during the ongoing year on account of decline in equity base. Going forward, with no major capex planned, PCL does not aim to obtain any additional debt. Going forward, ratings will remain contingent upon improvement in capacity utilization, profitability and liquidity metrics along with continued sponsor support to meet any shortfall in debt servicing.
For further information on this rating announcement, please contact Ms. Maham Qasim 042-35723411-13, (Ext. 8010) and/or the undersigned at 042-35723411-13 (Ext. 8008) or email at

Maimoon Rasheed

Applicable Rating Criteria: Industrial Corporates

VIS Issue/Issuer Rating Scale

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