Press Release

VIS Assigns Initial Ratings to Sazgar Engineering Works Limited

Lahore, January 25, 2024: VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘A/A-2’ (Single A/A-Two) to Sazgar Engineering Works Limited (‘SAZEW’). The medium to long term rating of ‘A’ signifies good credit quality with adequate protection factors. Risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payment. Liquidity factors and company fundamentals are sound. Access to capital markets is good. Risk factors are small. Outlook on the assigned rating is ‘Stable’.

SAZEW was established in 1991 as a private limited company and converted into a public limited company in 1994. The company is engaged in the manufacturing and selling of automobiles, auto parts and household appliances. The company’s major ownership has rested with Hameed family since inception. SAZEW was awarded Greenfield Status in the Automotive Development Policy (2016-21). SAZEW’s yearly installed capacity is 24,000 units for the four-wheelers and 20,000 units for the three-wheelers. SAZEW has international partnerships with two Chinese automobile groups - Beijing Automotive Group Company Ltd. (BAIC) and Great Wall Motor Company Ltd. (GWM). With the debut of GWM's Haval brand in 2021, SAZEW moved into the passenger automotive industry. BAIC's commercial vehicle production commenced in 2021.

The ratings take into account high to medium business risk associated with the automobiles sector; volumetric sales of automobiles declined during FY23 and 1QFY24. However, volumetric sales of SAZEW have been increasing on the back of higher demand of its four wheelers especially HEV due to escalation in fuel prices, enhanced features and lower prices of its automobiles vis-à-vis competitors. As a result of higher volumetric off-take of high margin four-wheelers, sales and gross margins also showed significant improvement. Substantial growth in bottom-line was witnessed despite higher operating expenses and financial charges. Liquidity indicators have remained adequate. Debt coverages are sound and have been improving on a timeline basis. The ratings incorporate low gearing level during the rating horizon as the company projects to meet working capital requirements through internal cash generation along with no major capex in the foreseeable future. The ratings remain dependent on the improving trend in projected sales, profitability and cash flows while maintaining sound coverages.

For further information on this rating announcement, please contact the undersigned at 042-35723411-12 (Ext: 8008) or email at

Maimoon Rasheed

Applicable Rating Criteria: Industrial Corporates (May 2023)

VIS Issue/Issuer Rating Scale

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