Press Release

VIS Reaffirms Entity Ratings of Pakistan Cables Limited

Karachi, February 2, 2021: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Pakistan Cables Limited (PCL) at ‘A/A-1’ (Single A/A-One). Outlook on the assigned ratings is ‘Stable’. The long term rating of ‘A’ signifies good credit quality. The short-term rating of ‘A-1’ signifies high certainty of timely payment. The previous rating was announced on October 11, 2019.

The assigned ratings incorporate PCL’s position as the leading wire & cable manufacturer in the country, strong brand strength and reputation as a provider of quality cables. Business risk profile incorporates growing demand for wires & cables in the ongoing year as housing and construction activities in the country have picked pace. Overall competitive intensity in the sector remains high. Corporate governance framework is considered sound as indicated by effective board oversight, stable and professional management team and focus on transparency and disclosures.

Performance during FY20 had been impacted due to Covid-19 which resulted in decline in sales. Going forward, VIS expects profitability to improve in FY21 on the back of volumetric growth in sales, improvement in margins and lower finance cost. This is evident from the performance of the company in first half of FY21. Volumetric growth in sales is expected to be driven by uptick in construction activity while finance cost is expected to decline due to lower benchmark rates. Cash flow coverages are expected to improve in FY21. Capital structure remains conservative and supports ratings. Leverage indicators have been maintained around prior year level; however, the same are expected to increase going forward to finance expansion but are projected to remain within manageable levels.

At present, PCL operates through a single manufacturing facility in SITE, Karachi. In 2018, PCL purchased a 42-acre plot of land in Nooriabad, Sindh which shall be utilized for the purposes of establishing manufacturing facilities of the company. In the year 2019, PCL was the first company to launch an e-commerce platform in the cable industry.

For further information on this rating announcement, please contact Ms. Asfia Aziz or the undersigned (Ext: 306) at (021) 35311861-66 or email at info@vis.com.pk.



Faryal Ahmad Faheem
Deputy CEO

Applicable Rating Criteria: Industrial Corporates (April 2019)
https://s3-us-west-2.amazonaws.com/backupsqlvis/docs/Corporate-Methodology-201904.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 2021 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .