Press Release

VIS Reaffirms Entity Ratings of Agility Logistics (Pvt.) Limited (ALPL)

Karachi, December 24, 2020: VIS Credit Rating Company Limited (VIS) has reaffirmed entity ratings of Agility Logistics (Pvt.) Limited (ALPL) at ‘A/A-2’ (Single A/A- Two). Outlook on the assigned ratings is stable. Previous rating action was announced on December 31, 2019.

The assigned ratings incorporate strong sponsor support from the Agility Group which has global presence, and are amongst the leading logistics and supply chain players in the Middle East. Ratings also take into account Company’s adequate business and financial risk profile and sound corporate governance infrastructure which is supported by a well-designed organizational structure and adequate IT platform. ALPL has extensive outreach through a growing network of warehouses, depots and service centers. The Company’s business is diversified into a wide range of industries including FMCG, healthcare, textile, telecom, and oil and gas.

ALPL’s business risk profile is supported by strong client base which includes large local corporates and MNCs and diversified operations. Comfort is also drawn from high customer retention, long-term relationships with top customers, and continuous addition of new clients. However, ratings are constrained by competitive nature of the logistics industry resulting in low margins for industry players and performance remaining exposed to macroeconomic volatility. Recovery in macroeconomic indicators in recent months in general and export sector in particular bodes well for revenue growth. Assessment of financial profile incorporates double digit growth in revenues over the rating horizon and cost rationalization initiatives which are expected to result in improvement in profitability. Ratings also take into account currently low quantum of cash generated from operations and free cash flows; although the same is projected to improve going forward. While remaining within manageable levels, leverage indicators are expected to increase as debt drawdown is undertaken for the warehouse project. Assigned ratings also incorporate the approval for conversion of long-term debt from Parent Company to equity and reversal of accrued markup, which will improve the liquidity and capitalization indicators. VIS had already incorporated this in its previous assessment and therefore there is no change in ratings on account of the same.

Net Sales of the Company have grown at a CAGR of 18.0% during 2015-2019. Growth momentum has been impacted in 2020 due to impact of Covid-19 particularly on the distribution business. However, management expects profitability profile to sustain due to cost rationalization initiatives. For 2021, the Company is expected to record double digit growth going forward on the back of new customer additions and rising export business. Ratings remain dependent on maintaining conservative financial profile, low leveraged capital structure and sound cash flow coverage post acquisition of long-term debt.

For further information on this rating announcement, please contact the undersigned (Ext: 306) at 021-35311861-71 or email at .

Faryal Ahmad Faheem
Deputy CEO

Applicable Rating Criteria: Industrial Corporates (May 2019)

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