Press Release
VIS Reaffirms Entity Ratings of Ana & Batla Industries (Private) Limited
Karachi, Sep 12, 2024: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Ana & Batla Industries (Private) Limited (‘ABI’ or ‘the Company’) at ‘BBB/A-2’ (Triple B/A-Two). Medium to Long Term Rating of ‘BBB’ signifies adequate credit quality & sufficient and reasonable protection factors. Risk factors are considered variable if changes occur in economy. The short-term rating of ‘A-2’ denotes good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on May 18, 2023.
The assigned ratings reflect ABI’s moderate business risk profile, supported by stable demand for baby diapers, its key product segment. Company’s other products include sanitary napkins, adult diapers, body razors, tooth brushes, wipes etc. Pakistan’s large population and rising consumer awareness for hygiene drive demand for the Company’s products. The local diaper industry has transitioned from import-reliant to largely self-sufficient, benefiting from favorable import restrictions and duty structures. ABI’s strategy of catering to different market segments with varied pricing has enabled it to compete effectively with multinational brands as well. Management has successfully maintained the Company’s presence across all regions of Pakistan.
During FY23, ABI's topline improved due to price increases though sales volumes of some secondary products declined during the review period. Despite higher production costs, the Company transferred the burden to customers, improving gross and operating margins, though net margins declined due to increased finance cost. In 9MFY24, revenue grew further, driven by higher volumes, though margins were impacted by inflation. ABI explored new export markets and introduced a premium product range locally, aiming to expand market share. Liquidity profile remained adequate, with improved cash conversion, however debt coverage levels weakened slightly. The Company continued its policy of no dividend disbursements hence retaining profits to strengthen equity and reduce debt in pursuance of a debt-averse policy. Going forward, improvement in the corporate governance structure and debt coverage will remain important for the ratings.
For further information on this ratings announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria: 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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