Press Release

VIS Maintains Entity Ratings of Digital World Pakistan (Pvt.) Ltd.

Karachi, Aug 18, 2023: VIS Credit Rating Company Limited (VIS) has maintained the entity ratings of Digital World Pakistan (Private) Limited (DWPL) at ‘A-/A-2’ (Single A Minus/A-Two). Outlook on the assigned ratings has been revised from ‘Stable’ to ‘Negative’. The long-term rating of ‘A-’ signifies good credit quality with adequate protection factors. Risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ indicates good certainty of timely payment. Liquidity factors and company fundamentals are considered sound. Access to capital markets is good. Risk factors are small. The previous rating was announced on July 19, 2022.

The assigned ratings factor in the Company’s position as one of the leading players in the home appliances segment (particularly air conditioners), robust brand image and sponsors’ industry experience. Revision in outlook takes into account the elevation of overall business and financial risk profile of the Company owing to significant supply and demand side issues emanating from ongoing import restrictions due to subdued foreign exchange reserves and sizeable currency devaluation. Additionally, high inflationary environment has diminished the purchasing power of consumers considerably affecting the demand especially for the Company’s major revenue driver, the premium GREE-branded air-conditioner product line. As a consequence, capacity utilization has reduced sharply across all product lines in the ongoing year. The ratings also take into account gradual resumption of import activities in 4QFY23 which is expected to ease supply-related issues in the following year.

The Company’s financial risk profile takes into consideration the significant compression in the topline owing to decline in demand and lack of raw material availability in the ongoing year. While gross margins witnessed an increase due to inventory gains, sizeable jump in financing charges in line with policy rate hikes have severely pressured net margins in the ongoing year. Consequently, cash flow coverages against outstanding obligations and debt-servicing capacity of the Company are stressed. Furthermore, release tied-up liquidity in loans to related party and tax refunds from GoP will be critical from a ratings perspective. Improvement in gearing and leverage indicators was noted being attributable to decline in short-term borrowings as lower business activity decreased working capital requirements. Going forward, although the Company has no plans of additional long-term debt drawdown, however with projected increase in business activity, capitalization indicators are expected to increase. Amidst challenging macroeconomic environment, the ratings are strongly underpinned by the Company’s ability to uplift its profitability performance and enhance its debt-paying capacity to levels that commensurate with the benchmarks for the assigned ratings.

For further information on this rating announcement, please contact Ms. Asfia Amanullah and/or the undersigned at 021-35311861-66 (Ext. 207) or email at

Sara Ahmed

VIS Entity Rating Criteria: Corporates (May 2023)

VIS Issue/Issuer Rating Scale:

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