Press Release

VIS Reaffirms Entity Ratings of Agriauto Stamping Company (Pvt.) Limited

Lahore, April 01, 2024: VIS Credit Rating Company reaffirms the entity ratings of Agriauto Stamping Company (Pvt) Limited (ASC or ‘the Company’) at 'A-/A-2' (Single A Minus/A-Two). The medium to long-term rating of 'A-' indicates good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. The 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 March 29, 2023.

ASC is a wholly-owned subsidiary of Agriauto Industries Limited (AGIL) and is engaged in the manufacture and sale of sheet metal stamping parts, sub-assembly operations, dies/checking fixtures/jigs. ASC specializes in assembling and stamping of high tensile parts for automobiles, with technical collaboration with M/S. Ogihara (Thailand) Co. Ltd. The ratings factor in the strong sponsorship profile of the House of Habib (HoH), one of the country’s largest business conglomerates with diversified interests across several sectors, as well as the Company’s market position as the sole producer of sheet metal stamping parts and catalytic converters in the local auto parts industry. ASC enhanced its manufacturing capacity with the addition of two new pressing lines and extension of storage facilities over the rating review period. However, the overall business risk profile of the Company was elevated during the period under review on account of steep inflation, currency depreciation, policy rate hikes and import restrictions which have significantly impacted demand for automobiles as well as supply-side operations.

Resultantly, a significant decline in sales has been witnessed. This along with high production costs and financing charges have resulted in net losses during the ongoing year. Given deterioration in cash flows, coverages and debt service capacity have also been impacted. Meanwhile, capitalization indicators have remained sound despite some increase witnessed on account of higher debt levels and slight erosion of equity base. Going forward, the ratings will remain contingent on improvement in profitability and coverages whilst maintaining leverage indicators at manageable levels amidst the challenging business environment.

For further information on this ratings announcement, please contact at 042-35723411-13 or email at info@vis.com.pk.




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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