Press Release

VIS Reaffirms Entity Ratings of CBM Plastics Private Limited

Karachi, December 21, 2023: VIS Credit Rating Company Limited reaffirms entity ratings of CBM Plastics Private Limited (‘CBM’ or ‘the Company’) to 'BBB+/A-2' ('Triple B-plus'/'A-Two'). Medium to long term rating of 'BBB+' indicates adequate credit quality; protection factors are reasonable and sufficient. Risk factors are considered variable if changes occur 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. Outlook on the assigned ratings remains ‘Stable’. Previous Rating action was announced on November 22, 2022.
CBM Plastics (Pvt.) Limited was founded in 1992 and specializes in production and domestic sale of plastic containers and packages. The product portfolio mainly includes blow-molded plastic drums, containers, jerry cans, caps and closures that are primarily supplied to the lubricant oil industry. Manufacturing facility is located at S.I.T.E industrial area, Karachi with its manufacturing plants located at plots # F-21 and # X-7/B, S.I.T.E., Karachi, Pakistan. It is a family-owned business, with two members collectively owning more than 60% shareholding and the rest distributed among remaining twelve members.
Assigned ratings incorporate a moderate business risk profile, attributed to exposure to exchange rate volatility and moderate margins, despite limited competition and low risk of new entrants. The industry's dependence on High-Density Polyethylene (HDPE) imports exposes it to price volatility and exchange rate fluctuation risks.
Assigned ratings also consider CBM's financial risk profile. In FY23, the Company's topline grew, driven by successful cost pass-through to customers, managing to strengthen gross margins. However, net margins faced constraints from escalating finance costs due to local policy rate increases. In FY23, there was a marginal improvement in capitalization metrics with a slight reduction reported in gearing and leverage ratios. Ratings also account for the Company’s ability to maintain a balance between assets and liabilities, resulting in a stable liquidity profile throughout the years. Similarly, CBM has also historically sustained a healthy coverage profile, providing support to assigned ratings.
Going forward, ratings will remain sensitive to the Company's ability to strengthen its profitability, and capitalization profile. Moreover, improvement in the liquidity metrics would add to the strength of the outstanding ratings.
For further information on this ratings announcement, please contact Mr. Saeb Muhammad Jafri (Ext: 202) or the undersigned (Ext: 201) at 021-35311861-64 or email at info@vis.com.pk.






Javed Callea
Advisor


Applicable Rating Criteria:
Industrial Corporates
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf

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