Press Release

VIS has Reaffirmed Entity Ratings & Finalized Sukuk Ratings of OBS AGP (Private) Limited

Karachi, June 17, 2022: VIS Credit Rating Company Ltd. (VIS) has reaffirmed entity ratings of ‘A/A-1’ (Single A/A-One) to OBS AGP (Private) Limited (OBS AGP). VIS has also finalized instrument rating at A+ (Single A plus) to the Sukuk issue of Rs. 2,600m. Outlook on the assigned ratings is ‘Stable’. Long-term rating of ‘A’ signifies good credit quality with adequate protection factors. Risk may vary slightly from time to time because of economic conditions. Short Term Rating of ‘A-1’ indicates high certainty of timely payment, excellent liquidity factors supported by good fundamental protection factors and minor risk factors. The previous rating action was announced on May 3, 2021.

OBS AGP (Pvt.) Limited, majorly owned by AGP Limited, on July 30, 2021 completed the acquisition of 22 brands from Sandoz AG, a global leader in generic pharmaceuticals. The total funding requirement was Rs. 3,700m and was structured entailing a Sukuk issue of Rs. 2,600m and the balance through equity. Currently the transfer of marketing authorizations of the acquired brands is under process with Drug Regulatory Authority of Pakistan (DRAP) and is expected to be completed by end December’ 22. In the meanwhile, OBS AGP is controlling the sales and revenue from sale of acquired brands. The existing toll manufacturing will continue till transfer of marketing authorizations and majority of portfolio and will subsequently be shifted to manufacturing facilities of the Parent Company AGP limited. Assigned ratings take into account the inelastic demand for the product portfolio being acquired along with high relative market share and brand value enjoyed by major products (primarily Azomax and Zatofen).

Ratings also factor in projected gradual organic growth, going forward, on the back of expected increase in prices and uptick in volumetric sales through planned increase in market penetration and launch of new products. Liquidity indicators provide adequate cushion for the timely repayments. Pressure on coverages may arise over next financial year due to increase in finance charges. Management of the same within parameters for the assigned ratings is considered important from a ratings perspective. Moreover, comfort is drawn from sponsor’s (AGP) established market position, long record of accomplishment in the pharmaceutical industry and the resulting operational, managerial and financial support available to the SPV. Internal cash generation and timely reduction in debt is expected to result in improvement in leverage indicators. Ratings remain dependent on maintaining sound debt servicing cushion and reduction in leverage indicators in line with projections. Comfort to the Sukuk ratings is drawn from the establishment of a rental payment reserve account wherein the rental amount of one upcoming installment shall always be available. In addition, corporate guarantee by AGP for the entire principal amount of the Sukuk is also available.

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

Sara Ahmed

VIS Entity Rating Criteria Methodology - 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 2022 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .