Press Release

VIS Maintains Entity Ratings of Orient Electronics (Pvt.) Limited

Karachi, May 23, 2024: VIS Credit Rating Company Limited maintains entity ratings of Orient Electronics (Pvt.) Limited ('OEL' or 'the Company') to 'A-/A-2' ('Single A minus'/'A-Two'). 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. Rating Watch has been removed and the outlook for assigned ratings is “Negative”. Previous rating action was announced on May 9, 2023.

Orient Electronics (Private) Limited was incorporated on August 23, 2005. The activities of the Company include manufacturing, assembling, and sales of air conditioners, refrigerators, deep freezers, LED TV, water dispensers, microwave ovens, other home appliances, and trading of related electrical equipment. The factory and registered office of the Company are located at 26 - KM Multan Road, Lahore. OEL’s parent company is Orient Color Labs (Private) Limited (‘the Parent Company’ or ‘OCL’) which holds 97.86% of total share capital of the Company.

Assigned ratings incorporate the medium to high business risk profile attributed to inherent product cyclicality and exchange rate risk within the household appliances market. The demand for household appliances is closely linked to consumer purchasing power, rendering it susceptible to economic fluctuations. Moreover, with raw materials being mostly semi-finished imported goods, the industry is also exposed to exchange rates volatility. However, medium level of competition among top players in the sector provides support to assigned ratings.

While Rating Watch has been removed, the Company’s ratings outlook is considered ‘Negative’ on account of lower topline impacting OEL’s profitability in recent years, albeit improved margins. This has also led to strain on the Company’s coverage profile. However, active sponsor support and OEL's improving capitalization metrics support the assigned ratings. Additionally, the liquidity profile is considered adequate, although potential for liquidity risk is noted from the inflation of the payable cycle moving forward.

Going forward, ratings will be sensitive to improvement in the Company’s profitability profile and the recovery of its coverage profile to levels adequate to be commensurate with assigned ratings. Additionally, ongoing active sponsor support will be a key consideration for future reviews.

For further information on this ratings announcement, please contact at 021-35311861-64 or email at

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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 .