Press Release

VIS Maintains Entity Ratings of International Industries Limited

Karachi, November 13, 2023: VIS Credit Rating Company Ltd. (VIS) has revised the rating outlook of International Industries Limited ('IIL' or 'the Company') from 'Rating Watch - Developing' to 'Stable'. The entity ratings have been maintained at 'AA-/A-1' (Double A Minus/A-One). The medium to long-term rating of 'AA-' denotes high credit quality coupled with strong protection factors. Moreover, risk factors may vary slightly with possible changes in the economy. The short-term rating of 'A-1' signifies high certainty of timely payment with excellent liquidity and good company fundamentals. Risk factors are minor. Previous rating action was announced on April 06, 2023.
IIL is a major producer of steel pipes, stainless steel tubes, and polymer pipes and fittings, with manufacturing facilities in Karachi and Sheikhupura. The Company has two wholly owned subsidiaries, IIL Americas Inc and IIL Australia Pty. Inc, and established IIL Construction Solutions (Pvt.) Ltd. as a new wholly owned subsidiary in FY22. These subsidiaries give the Company access to international markets and give support to its export and local initiatives.
Assigned ratings for IIL consider the Company's consistent financial performance and stable metrics, even during economic challenges in FY23. Pakistan's economy faced difficulties, including foreign exchange shortages that led to currency fluctuations and heightened inflation. The State Bank of Pakistan implemented measures to stabilize the economy, affecting sectors like construction, cement, and steel, resulting in reduced sales volumes and decreased capacity utilization. However, IIL managed to sustain its margins due to eased international steel prices while impact of currency volatility on profitability was mitigated by effective pricing adjustments. Additionally, sound financial management, encompassing decreased borrowing, limited the impact of elevated benchmark interest rates on profitability, with cost controls providing further support to the Company's bottom line. However, overall bottom-line growth remained constrained by lower volumetric sales.
Ratings also take into account changes observed in IIL's capitalization and liquidity metrics in FY23. Capitalization demonstrated modest improvement as both gearing and leverage ratios exhibited positive trends, influenced by reduction in total debt utilization. However, the Company did acquire a fresh long-term facility for short-term debt restructuring. The same had a positive effect on liquidity, resulting in a modest increase in the current ratio due to reduced current liabilities. Meanwhile, there was a marginal deterioration in the coverage profile, mainly on account of lower funds from operations stemming from constrained revenue and slightly higher financial charges, despite a reduction in total debt. Nonetheless, the Company's overall debt servicing profile remained commensurate with the assigned ratings.
Going forward, ratings will be sensitive to IIL's efficient inventory management and improvement in cash conversion cycle coupled with overall improved indicators. The capitalization and liquidity metrics should remain aligned with the assigned ratings, alongside the maintenance of sustained profitability and coverage indicators.
For further information on this ratings announcement, please contact Mr. Saeb Muhammad Jafri (Ext: 202) and/or the undersigned (Ext: 207) at 021-35311861-64 or email at

Sara Ahmed

Applicable Rating Criteria: Industrial Corporates (May 2023)

VIS Issue/Issuer Rating Scale

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