Press Release

VIS Maintains Entity Ratings of Maple Leaf Cement Factory Limited

Karachi, September 20, 2023: 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 Aug 10, 2022.
The ratings assigned to MLCF take into account elevated business risk profile of the cement industry given decline in volumetric sales owing to dampened local market demand amid weak macroeconomic indicators. There has been a decline in cement production on a timeline owing to lower utilization of PSDP budget owing to shift in government’s focus to stabilize the economy during the rating review period. The demand is expected to remain weak in near term on account of consumer purchasing power depletion and overall economic slowdown. However, foreseeing the resumption of CPEC, progress in dam projects coupled with projected increase in housing sector demand, existing production capacities are expected to be absorbed in the medium to long term. In line with trimmed production levels, the MLCF’s capacity utilization has decreased; however, the management plans to mitigate risk of low utilization by only operating higher efficiency lines ensuring that idle capacity will not add to fixed cost. The ratings are underpinned by successful operation of expansion initiatives particularly Line-IV.

Assessment of financial risk profile incorporates notable upward momentum in revenues, accompanied by improvement in margins during the outgoing year stemming largely from higher sales prices, operational efficiencies due to operationalization of line-IV, greater in-house energy generation and cost-effective procurements. The ratings reflect maintaining the liquidity profile during the review period; the same is deemed sufficient in respect to outstanding obligations. The gearing and leverage indicators trended upwards during FY22 owing to sizable procurement of long-term borrowings to fund capex on Line-IV. Going forward, with no new major capital expenditure planned, MLCF does not aim to obtain any additional debt. Subsequently, with uptick witnessed in profitability metrics, profit retention strategy adopted for the short-term coupled with successful periodic long-term repayments, the gearing and leverage indicators are expected to improve during the rating horizon. The projected improvement of gearing indicators is considered important from the ratings perspective. Financial risk profile remained intact and is considered sound on the back of projected growth in margins, sound coverages and manageable leverage indicators. Ratings are dependent on demand uptick in the short to medium term for optimization of capacity and maintaining the financial performance indicators, going forward.

For further information on this rating announcement, please contact Ms. Maham Qasim (Ext: 402) at 042-35723411-13 or the undersigned (Ext: 207) at 35311861-64 or email at

Sara Ahmed

VIS Entity Rating Criteria: Corporates (May 2023)

VIS Rating Scale

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