Press Release

JCR-VIS Reaffirms Ratings of Attock Cement Pakistan Limited

Karachi, April 13, 2017: JCR-VIS Credit Rating Company Limited has reaffirmed entity ratings of Attock Cement Pakistan Limited (ACPL) at ‘A+/A-1’ (Single A Plus/A-One). Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on March 31, 2016.

The assigned ratings to ACPL incorporate company’s strong brand strength and low financial risk as manifested in sound liquidity, capitalization and profitability metrics. The ratings also reflect strong financial profile of the parent entity, Pharaon Investment Group Limited Holding S.A.L., having diversified interest in multiple sectors. Moreover, adequate corporate governance as evident from satisfactory board oversight, stable & professional management team and adequate IT and controls infrastructure provide support to ratings.

Demand outlook for the sector remains healthy driven by initiation of infrastructure projects under China Pakistan Economic Corridor and private sector housing schemes. However, expansion announcement by major players is expected to result in significant increase in capacities representing 100% and 50% of existing capacity for South and North Zone respectively. Resultantly, capacity utilization levels are expected to dip particularly in the South Zone. Management expects current industry structure to continue due to capital commitment of major players, projected closure of inefficient lines and growth in domestic demand. Ratings take into account materialization of these events. Significant increase in fuel prices may also impact margins of industry players.

ACPL is currently operating with Line 1 and Line 2 and is in the process of adding Line 3. Total rated capacity of Line 1 and Line 2 is 1.83m and is expected to reach over 3m Tonnes per annum with completion of Line 3. Significant progress has been achieved on Line 3 expansion and the Project is expected to be complete in the last quarter of 2017. Progress has also been noted with regards to ACPL’s plan to operate a cement grinding plant in Iraq. In this regard, Letter of Credit has been established while project is expected to be completed by June’2018.

The Company’s strong financial profile is supported by local and international sales mix, improving profitability & cash flows, favorable working capital cycle and healthy capitalization indicators. Improvement in cash flows has resulted in projected borrowing requirement for expansion reducing to half of initially envisaged. Going forward, profitability and cash flows will be supported by commencement of line 3 operations and completion of Iraq expansion project.

For further information on this rating announcement, please contact the undersigned (Ext: 501) or Mr. Jamal Abbas Zaidi (Ext: 516) at 35311861-70 (10 lines) or fax to 35311873.



Javed Callea
Advisor

Applicable Rating Criteria: Industrial Corporates (May 2016)

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 2017 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .