Press Release

VIS Assigns Final Ratings to the Sukuk issue of Crescent Steel and Allied Products Limited

Karachi, October 24, 2022: Upon review of legal documents, VIS Credit Rating Company Ltd. (VIS) has assigned final rating of A- (Single A Minus) to the Sukuk issue of Rs. 800m of Crescent Steel and Allied Products Limited (CSAPL). The outlook on the rating is ‘Stable’. VIS has assigned an entity rating of A-/A-2 to CSAPL dated Oct 11, 2022.

The assigned rating incorporate CSAPL’s diversified revenue streams including exposure to steel, textile, capital markets and power sector coupled with low leveraged capital structure. The rating is 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.

In FY22, revenue from steel division was reported lower due to fewer projects being materialized coupled with strain on gross margins, given surge in key inputs. The Company, however, 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 (hot rolled coil) 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.

CASPL has issued a privately placed Sukuk of Rs. 800m on Oct 11, 2022 for working capital purposes. The tenor of the issue is of three years and principal will be redeemed in six equal installments starting from the 6th month of drawdown. Security features of the Sukuk entail ranking charge on Fixed Assets/Constructive mortgage charge. Pricing on the issue is 6 month KIBOR +2%.

For further information on this rating announcement, please contact M. Amin Hamdani (Ext. 217) or Ms. Sara (Ext: 207) or at 021-35311861-70 or email at info@vis.com.pk.



Sara Ahmed
Director

Applicable Rating Criteria: Structured Covered Bonds/Sukuk (June 2021)
https://docs.vis.com.pk/docs/SCB202106-1.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 2022 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .