Press Release

VIS Credit Rating Company Assigns Initial Entity Ratings to Ana & Batla Industries (Private) Limited

Karachi, February 07, 2022: VIS Credit Rating Company Limited has assigned initial entity ratings of ‘BBB+/A-2’ (Triple B Plus/A-Two) to Ana & Batla Industries (Private) Limited (ABI). The medium to long-term rating of ‘BBB+’ signifies adequate credit quality; Protection factors are reasonable and sufficient. Risk factors are considered variable if changes occur in the economy. The short-term rating of ‘A-2’ signifies 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 rating is ‘Stable’.

Incorporated in 2016, ABI is engaged in the manufacture and sale of personal hygiene products, including diapers for babies and adults, sanitary napkins, and wipes. The company’s production facilities are located in Karachi, with about 98% of its sales being concentrated in the local market comprising baby diapers. Business risk profile is considered moderate given growing demand dynamics of baby diapers (major segment in which the company operates) in view of large population base and high annual birth rate as compared to regional countries. Imposition of significant duty by the Government on the import of manufactured diapers has provided competitive advantage to the local manufacturers.

Assessment of financial risk profile highlights a stable growth in revenues over the years due to improving demand dynamics and shift in consumption towards locally manufactured personal care products due to price competitiveness. This, coupled with improving gross margins led by economies of scale, has ensured a consistent increase in profit earned by the business over time. Currently, about 60% of raw materials are imported from Malaysia, China, and Germany. Supply of raw materials from an associated corporation as planned will further help to reduce dependence on foreign suppliers and limit the impact of exchange rate fluctuations, ultimately leading to cost rationalization. Going forward, the management expects further improvement in revenues on the back of increased production capacity through addition of machines in the sanitary napkin and baby diaper divisions over the next two years. In line with increasing profitability, liquidity profile of the company is considered sufficient. Capitalization indicators of the company have improved on a timeline basis on account of profit retention and issuance of additional ordinary shares in FY21. A significant proportion of current debt financing is represented by interest bearing loan from the directors. Considering that the management does not have any plan to raise further debt going forward and expected increase in profits, leverage indicators are projected to remain on the lower side over the rating horizon. Maintenance of financial indicators at current levels is considered important from a ratings perspective.

Assigned ratings are constrained on account of weak corporate governance framework. Areas of improvement in the corporate governance infrastructure include strengthening of the overall audit framework with a separate internal audit department, induction of independent directors on board, hiring QCR rated external auditors or auditors on the SBP Panel, and forming specific board committees.

For further information on this rating announcement, please contact Ms. Asfia Aziz or the undersigned (Ext. 306) at 021-35311861-70 or email at

Faryal Ahmad Faheem
Deputy CEO

Applicable Rating Criteria: 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 .

VIS Credit Rating Company Limited