Press Release

VIS Maintains Entity Ratings of Digital World Pakistan (Pvt.) Limited

Karachi, June 07, 2024: VIS Credit Ratings Company Ltd. (VIS) has maintained entity ratings of Digital World Pakistan (Pvt.) Limited (‘DWPL’ or ‘the Company’) at A-/A-2 (‘Single A Minus/A-Two’). Medium to long Term Rating of ‘A-’ reflects good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. 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. Outlook on the assigned ratings is changed to ‘Stable’ from ‘Negative. The previous rating action was announced on August 18, 2023.

DWPL is a Company limited by shares incorporated on April 06, 2000, in Pakistan. The principal activity of the Company is manufacturing and sale of varied interrelated "consumer home electronic products". The registered office of the Company is situated al 5 Zafar Ali Road, Gulberg-CV, Lahore, Pakistan.

Assigned ratings incorporate the medium to high business risk profile of the household appliances industry, characterized by heightened exposure to cyclicality and exchange rate risk. Despite moderate competition among top players, challenges persist with hampered demand resulting from economic stressors.

Assigned ratings also consider the profitability profile, capitalization profile, liquidity profile, and coverage profile. The profitability profile reflects revenue decline in FY23 due to import restrictions and decreased local demand, with gross margin improvement attributed to inventory gains. However, net margins declined primarily due to increased finance costs. The capitalization profile strengthened in FY23, with a reduction in short-term borrowings, although a slight uptick was observed in 3QFY24. Debt service coverage faced stress, while short-term debt coverage remained adequate. Liquidity profile remains stable and adequate.

Change in outlook is supported by improvement and/or consolidation of major financial indicators, and healthy cash reserves, albeit challenges. Going forward, ratings will remain sensitive to the Company’s ability to recover its profitability and coverage profiles to be commensurate with assigned ratings.

For further information on this ratings announcement, please contact 021-35311861-64 or email at info@vis.com.pk.



Applicable Rating Criteria: Industrial Corporates
https://docs.vis.com.pk/docs/CorporateMethodology.pdf

VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.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 2024 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .