Press Release

VIS Reaffirms Entity Ratings of Mannan Shahid Forgings Limited

Karachi, May 11, 2023: VIS Credit Rating Company Limited (VIS) has reaffirmed entity ratings of ‘A-/A-2’ (Single A Minus/A-Two) assigned to Mannan Shahid Forgings Limited (MSFL). The medium to long-term rating of ‘A-’ denotes good credit quality coupled with adequate protection factors. Moreover, risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payment coupled with sound company fundamentals and liquidity factors. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on March 17, 2022.

The company is engaged in manufacturing high precision mechanical components for auto parts manufacturers and machining houses in Pakistan and abroad. The ratings factor in presence of limited number of organized players operating in the country with relevant capacities and technical expertise, giving rise to high customer retention and largely steady demand for relevant products in the local market. The concentration risk in sales has remained high which has been partially offset by high retention levels and induction of some new clients and products in the recent years. With demand being contingent largely on the automotive sector, local demand outlook is subdued in view of severe macroeconomic challenges in the country brought by import restrictions, currency devaluation, high interest rates, soaring inflation and increased power costs. However, ratings garner support from the fact that domestic demand risk is mitigated through the company’s focus on exports that have shown robust volumetric growth on a timeline basis.

Financial risk assessment incorporates double-digit topline growth in FY22 supported by higher exports sales, however with challenging macroeconomic environment and global inflation led demand slowdown revenue growth has been limited in HYFY23. Meeting projected growth topline targets and further enhancing export base will be vital, going forward. Assigned ratings also take into account inventory gains led growth in profitability margins during FY22, however, during the ongoing year the same were impacted due to limited ability to pass on the increase in input costs to the customers due to challenging macroeconomic environment and elevated finance costs. Liquidity ratios of the company although weakened in the ongoing year due to subdued profitability, however cash flow coverages against outstanding obligations remain sound. Ratings gather strength from low leveraged capital structure of the Company. Achieving projected revenue growth and profitability while maintaining liquidity and capitalization profiles would remain key rating considerations. Meanwhile, the ratings remain sensitive to vulnerability of raw material prices to exchange rate fluctuation.

For further information on this rating announcement, please contact Ms. Asfia Aziz or the undersigned (Ext. 207) at 021-35311861-70 or email at

Sara Ahmed

Applicable Rating Criteria: Industrial Corporates (August 2021)

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