Press Release

VIS Maintains Entity Ratings of Maple Leaf Cement Factory Limited

Karachi, August 10, 2022: VIS Credit Rating Company Limited (VIS) has maintained the entity ratings of Maple Leaf Cement Factory Limited (MLCF) at ‘A/A-1’ (Single A /A-One). Long-term rating of ‘A’ denotes good credit quality, with adequate protection factors. Moreover, risk factors may vary with possible changes in the economy. The short-term rating of ‘A-1’ denotes high certainty of timely payment, liquidity factors are excellent and supported by good fundamental protection factors. Outlook on the assigned rating has been revised from ‘Positive’ to ‘Stable’. The previous rating action was announced on May 28, 2022.
The ratings assigned to MLCF take into account the elevated business risk profile of the cement industry as sales declined during the ongoing year owing to reduction in overall dispatches emanating from a drop in in export volume, which was mainly attributable to supply chain issues and higher freight costs. The short-term outlook for the industry is sluggish, as the rising cost of cement, being driven by commodity bull cycle in coal and increase in domestic inflation, is likely to weigh on demand and profitability margins of cement companies. Furthermore, political uncertainty and fiscal constraints may impact development expenditure in the short-term horizon going forward. The assigned ratings continue to take into account the cyclical business risk profile of cement industry and the Company’s market position as the fourth largest cement producer in the country. Ratings also reflect the company’s satisfactory and efficient operations with MLCF being one of the low-cost producers in the cement sector. The Company has a diversified portfolio which includes Ordinary Portland Cement, Sulphate Resistant Cement, Low Alkali Cement, White Cement and Wall Coat.

Assessment of financial risk profile incorporates enhancement of margins in the outgoing year stemming largely from higher sales prices and operational efficiencies in greater in-house energy generation and cost-effective procurements. The ratings incorporate sound liquidity profile of the company; the same has improved during the rating review period and is considered adequate as evident from healthy cash flow coverages in relation to outstanding obligations. However, going forward, with notable drawdown of borrowings expected to fund ongoing capex primarily on Line-4, liquidity ratios are expected to trend downwards slightly till FY23. Given the additional debt projections FFO to Debt is expected to remain commensurate with the benchmark for the assigned rating. The ratings remain dependent on maintenance of margins, realization of projected capex targets without sizable cost escalation, incremental cash flow generation and cost savings from recent/ongoing capital expenditure and maintenance of leverage indicators.

For further information on this rating announcement, please contact Ms. Maham Qasim (042-35723411-13, Ext. 8010) and/or the undersigned at 021-35311861-66 (Ext. 207) or email at

Faryal Faheem Ahmed
Deputy CEO

Applicable rating criterion: Corporates (August 2021)

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