Press Release

VIS reaffirms Entity Ratings of Novatex Limited

Karachi, December 30, 2022: VIS Credit Rating Company Limited (VIS) has reaffirmed entity ratings of Novatex Limited (Novatex) at ‘AA/A-1+’ (Double A/A-One Plus). Long Term Rating of AA reflects 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+ indicates high certainty of timely payment; short term liquidity, including internal operating factors and/or access to alternative source of funds, is outstanding and safety is just below risk free Government of Pakistan’s short term obligations. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on July 29, 2021.

Novatex is a part of Gani and Tayub (G&T) group of companies; the group has more than seven decades of existence in diverse sectors including textile, plastic packaging and power generation. Novatex operates in three business segments namely PET Resin, PET Preforms and BoPET Films. Moreover, Novatex (through its wholly owned subsidiary Nova Powergen Limited) has also pursued diversification by venturing in the power segment through investment in Thalnova Power Thar (Private) Limited (TNPTL), a project which is currently under implementation.

The assigned ratings reflect moderate business risk profile, healthy financial risk profile and adequate corporate governance framework given the private shareholding structure. Business risk is considered moderate as business risk profile derives support from diversified local and international operations (three business segments and exports to 45 countries), significant pricing power and favorable demand-supply dynamics in key export markets. Moreover, business risk profile is also supported by projected stable demand with end clients belonging to the FMCG (mainly food and beverages) and Pharmaceutical sectors.

Assessment of financial risk profile of the Company reflects increase in sales revenue due to increase in effective prices amid rupee devaluation. Volumetric offtake is forecasted to stay intact given weak macro-economic conditions, however, due to expected increase in prices, topline is expected to grow further in FY23. In line with the topline, profitability profile of the Company also depicted improvement in FY22. Going forward, margins are expected to rationalize. Ratings also derive support from healthy capitalization indicators, despite elevated borrowings to finance expansions across all business segments. Assigned ratings remain dependent on maintenance of projected gearing and leverage indicators given planned expansions, going forward.

For further information on this rating announcement, please contact Mr. M. Amin Hamdani (Ext: 217) or the undersigned (Ext: 207) at (021) 35311861-66 or email at

Sara Ahmed

Applicable Rating Criteria: Industrial Corporates (August 2021)

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 2022 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .