Press Release

VIS Maintains Entity Ratings of Hi-Tech Lubricants Limited

Karachi, December 30, 2020: VIS Credit Rating Company Limited (VIS) has maintained the entity ratings of Hi-Tech Lubricants Limited (HTL) at ‘A/A-2’ (Single A/A-Two). The medium to long-term rating of ‘A’ denotes good credit quality, with adequate protection factors. Moreover, risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payment coupled with sound company fundamental and liquidity factors. Outlook on the assigned rating has been revised from ‘Rating Watch Negative’ Status to ‘Stable’. The previous rating action was announced on April 21, 2020.

The ratings assigned to HTL take into account the established footprint of the company entailing adequate brand equity and market share in the lubricant sector. The assigned ratings incorporate moderate business risk profile of the company underpinned by competitive landscape of the sector along with multi-pronged revenue stream owing to initiation of operations of oil marketing company (OMC) and establishment of service express centers. The ratings draw comfort from shift in business model with majority of product procurement transferred to subsidiary leading to cost rationalization. In the short to medium-term the demand driven risk is slightly escalated on account of ongoing pandemic as transport industry has been one of the hardest hit sectors.

The change in the rating outlook factors in improvement in the financial risk profile supported by positive momentum in earnings, improved margins, rescued profitability and liquidity indicators and conservative capital structure. The liquidity position of HTL continues to be aided by investments in liquid avenues. Financial performance of the company is expected to be facilitated by significant decline in debt levels and lower average market interest rates resulting in reduced finance cost as compared to the preceding year. The ratings will remain dependent on improvement of market position, maintenance of leverage and liquidity indicators at around current levels coupled with augmentation of topline on account of materialization of financial prospects with incremental sales generation from OMC operations and hospitality rental services. Key risk to performance in FY21 will be from a prolonged 2nd wave of the corona virus pandemic although risk of the same is considered manageable given that vaccine rollout is expected in the upcoming months.

For further information on this rating announcement, please contact Ms. Maham Qasim (042-35723411-13, Ext. 8010)and/or the undersigned at 021-35311861-66 (Ext. 201) or email at info@vis.com.pk .



Faryal Ahmad Faheem
Deputy CEO

Applicable rating criterion: Corporates (May 2019)
https://www.vis.com.pk/kc-meth.aspx

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 2020 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .