Press Release

VIS Reaffirms Entity Ratings of International Industries Limited

Karachi, October 22, 2024: VIS Credit Rating Company Limited (VIS) has reaffirmed entity ratings of International Industries Limited (‘IIL’ or ‘the Company’) at ‘AA-/A-1’ (Double A Minus/Single A-One). Medium to long term rating of 'AA-' indicates high credit quality; protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. Short-term rating of 'A-1' suggests strong likelihood of timely repayment of short-term obligations with excellent liquidity factors. Outlook on the assigned ratings remain ‘Stable’. Previous action was announced on November 13, 2023.

IIL, a key player in the steel and polymer pipes manufacturing sector, operates two facilities in Karachi and one in Sheikhupura. The Company’s subsidiaries, IIL Americas Inc. and IIL Australia Pty. Inc., facilitate market diversification, while IIL Construction Solutions (Pvt.) Ltd. offers local engineering services. IIL is part of the Amir S. Chinoy Group, which has operated in Pakistan's industrial sector for over seven decades, with interests spanning steel, and electrical products through entities such as International Steels Limited and Pakistan Cables Limited.

Assigned ratings incorporate IIL’s group position as one of the prominent and established market player in the Pakistan’s industrial sector. Business risk profile of the steel sector remains high, due to its close ties to the construction and cement industries, making it highly sensitive to economic cycles. Profitability is constrained by the sector’s exposure to commodity prices, energy-intensive nature and intense competition limits pricing power. Reliance on imported raw materials, vulnerable to exchange rate fluctuations, adds additional pressure in an already competitive industry. During the year, lackluster performance of construction, infrastructure and automobile sector due to prolonged import restrictions, high discount rate, high levels of inflation as well as political uncertainty prevailing in the country continued to dampen steel demand.

Assessment of financial performance reflects revenue increase for the Company on account of higher average prices, although sales volumes reduced. Export sales also remained dampened due to global slowdown of developed economies. Consequently, exchange earnings were impacted relative to previous years. Despite lower sales volumes, profitability was supported by effective working capital management, margin optimization, and significant dividends from subsidiary. Liquidity profile, while remaining sound, is exposed to extended receivable cycle, which has depicted improvement year over year. While the decline in operating profitability, has impacted the coverage metrics, income from subsidiaries provided support to debt servicing.

Going forward, ratings are expected to remain sensitive to the Company's ability to sustain its financial risk profile amidst external challenges. Group's investment in new business initiatives is anticipated to support future demand and contribute to incremental revenue streams. However, a sustained focus on managing energy costs, and working capital requirements will remain crucial in the wake of demand challenges.

For further information on this ratings announcement, please contact at 021-35311861-64 or email at info@vis.com.pk







Applicable Rating Criteria:
Industrial Corporates
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf

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 2024 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .