Press Release

VIS Reaffirms Entity Ratings of EMCO Industries Limited

Karachi, December 5, 2023: VIS Credit Rating Company Limited reaffirms entity ratings of EMCO Industries Limited ('EMCO' or 'the Company') at 'A-/A-2' (Single A minus/A-Two) with a 'Stable' outlook. Medium to long term rating of 'A-' indicates good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. Short term rating of 'A-2' indicates good certainty of timely payment. Liquidity factors and company fundamentals are sound. Access to capital markets is good. Risk factors are small. Previous Rating action was announced on November 14, 2022.
EMCO Industries Limited was incorporated as a Joint Stock Company in Pakistan on August 17, 1954, by the name of Electric Equipment Manufacturing Company (Private) Limited. Later, it was converted into a public company on August 20, 1983, and its name was changed to EMCO Industries Limited on September 12, 1983. The Company is involved in the production and sale of high/low porcelain-based insulators, switchgears, and substation products used in power sector.
Assigned ratings incorporate the business risk profile of the Company, characterized by its strong market presence in the electrical equipment manufacturing industry of Pakistan. It faces minimal competition from imports and smaller producers in the country. Moreover, EMCO's recent expansion into high voltage insulators further enhances its competitive profile as the exclusive local producer in this specialized segment. The Company's clientele includes government institutions and private sector electricity generation firms, providing support to its demand outlook.
Assigned ratings also consider the Company's financial profile. EMCO's profitability profile is supported by its leading position in the industry, allowing it the ability to extend favorable pricing. The Company demonstrated resilience in FY23, reporting a notable increase in its topline, despite challenges such as import restrictions and floods. However, heightened finance costs, with increased discount rates and debt drawdown for business model restructuring (BMR) projects, constrained net margin improvement. Moreover, due to the higher debt utilization for BMR the capitalization profile saw marginal deterioration but remained adequate for assigned ratings. EMCO's liquidity and coverage metrics remain healthy and continue to provide support to ratings.
Going forward, ratings will remain sensitive to the Company's ability to achieve its projected plans while maintaining its capitalization, liquidity and coverage profile commensurate with assigned ratings.
For further information on this ratings announcement, please contact Mr. Saeb Muhammad Jafri (Ext: 202) 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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