Press Release

VIS Maintains Ratings of Master Motor Corporation (Private) Limited

Karachi, January 26, 2023: VIS Credit Rating Company Limited (VIS) has maintained entity ratings of Master Motor Corporation (Private) Limited (MMCL) at ‘A/A-2’ (Single A /A-Two). Outlook on the assigned rating has changed to ‘Negative’. The long term rating of ‘A’ signifies good credit quality; Protection factors are adequate. Risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ signifies good certainty of timely payment; Liquidity factors and company fundamentals are sound. Access to capital markets is good. Risk factors are small. Last rating action was announced on October 28, 2021.

Revision in rating outlook takes into account elevated gearing levels and weakening in liquidity indicators which do not commensurate with the assigned rating. Rating outlook also factors in industry risk manifesting from the macroeconomic developments including interest rate environment, consistent rupee devaluation, IMF program, and geo-political situation, which has impacted demand in the current year. Ratings take into account the diversified sponsor profile of Master Group of Companies which provides strength to the company. Group support has been evident through timely financial assistance extended to the Company when needed. MMCL has been able to capture a sizable market share in both the truck and bus segments during the period under review, placing the Company in a leading position. However, sustainability of market position remains a key risk.

Maintenance of ratings incorporate healthy revenue growth in FY22, however margins declined due to increased cost pressures and financial charges. Moreover, increase in working capital requirements resulted in higher short term borrowings, in turn impacting profitability of the Company. Consequently, liquidity metrics depict weakening with lower current ratio and borrowing coverages. While the Company projects gearing levels to streamline, we expect competitive pressures to keep margins and profitability under pressure. Achievement of projected plans in terms of revenue and margins while improving gearing and liquidity indicators will be important for maintenance of assigned ratings.

For further information on this rating announcement, please contact the undersigned (Ext: 207) or Mr. M. Amin Hamdani (Ext: 217) at 021-35311861-71 or fax to 021-35311872-3.

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 2023 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .