Press Release

VIS Reaffirms Entity Ratings of Crescent Steel and Allied Products Limited

Karachi, Oct 11, 2022: VIS Credit Rating Company Ltd. (VIS) has reaffirmed the entity ratings of Crescent Steel and Allied Products Limited (CSAPL) at ‘A-/A-2’ (Single A Minus/A-Two). The long-term rating of ‘A-’ signifies good credit quality; Protection factors are adequate. Risk factors may vary with possible changes 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. CSAPL is in the process of issuing a Sukuk, which has a preliminary rating of ‘A-’ (Single A Minus). Outlook on the assigned ratings is Stable. The previous rating action was announced on June 25, 2021.

The assigned ratings incorporate CSAPL’s diversified revenue streams including exposure to steel, textile, capital markets and power sector coupled with low leveraged capital structure. The ratings are constrained by business risk of the steel segment, which comprises sizeable proportion of the company’s revenues. The steel division exhibits inherent cyclicality since business performance largely depends on infrastructure projects, especially pipeline augmentation projects of gas utility companies.

Bottom line of the Company improved in FY21 with adequate steel projects coupled with handsome income earned from cotton division. However, in the ongoing year, revenue from steel division was reported lower due to fewer projects being materialized in FY22 coupled with strain on gross margins, given surge in key inputs. Whereas, the Company posted higher earnings during the ongoing year largely emanating from hefty one-off dividend income received from one of its associated company. Going forward, the order pipeline of the Company looks promising as the Company has negotiated major projects, with business execution risk in one of the mega project largely mitigated as the raw material is to be provided by the buyer. Uptick in core business is likely to support future profitability, although business remains susceptible to changes in commodity and exchange rate volatility.

Ratings derive comfort from conservative financial management of the Company, whereby gearing and leverage indicators have been maintained at reasonable levels. CSAPL is currently in process of issuing Sukuk to meet working capital requirements, with the proposed Sukuk, gearing is expected to increase, albeit remaining within manageable levels. On the other hand, assigned ratings remain sensitive to cyclicality within the steel and the investment division of the Company.

For further information on this rating announcement, please contact the undersigned (Ext. 207) at 021-35311861-70 or email at

Sara Ahmed

Applicable Rating Criteria: 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 .