Press Release

VIS Reaffirms Entity Ratings of KSF Trizone Industries (Pvt) Limited

Karachi, July 30, 2024: VIS Credit Rating Company Limited (‘VIS’) reaffirms entity ratings of KSF Trizone Industries (Pvt) Limited ('KSF’ 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 June 12, 2023.

KSF is a Large-Size Company, incorporated in Pakistan on August 9, 2005. The principal activity of the Company is the manufacture and sale of polypropylene woven bags, tarpaulin sheets, EVA compound, plastic nets etc. KSF's registered office and manufacturing unit is situated at 24-km Lahore Sheikhupura Road Lahore, Pakistan. The Company’s manufacturing unit is situated on 24-km Lahore Sheikhupura Road Lahore.

Assigned ratings take into account the medium to high business risk profile characterized by market fragmentation and vulnerability to foreign exchange rates due to heavy reliance on imported materials. The packaging sector in Pakistan faces significant competition from numerous medium-sized enterprises offering comparable products, leading to competitive pressures on pricing and market share. KSF’s diverse customer base across various industries mitigates the risk of economic cyclicality. However, reliance on imported raw materials exposes the company to foreign exchange rate fluctuations and complications related to the import process.

Assigned ratings also consider the company's financial risk profiles. The profitability profile reflects slight growth in the topline driven by price adjustments despite lower sales volume. As a result, gross margin remained steady, while net margin declined due to higher finance costs and taxes. The capitalization profile is supported by low debt utilization and interest-free sponsor loans recognized as equity. The liquidity profile remains sound, with a stable current ratio and adequate short-term debt coverage. The coverage profile remained adequate, despite a reduction in the debt service coverage ratio (DSCR) and other coverage metrics due to increased financial burdens.

Going forward, ratings will remain sensitive to the Company’s ability to recover its contracting volumetric sales, maintaining its profitability and coverage profile to be commensurate with assigned 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

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 2024 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .