Press Release

JCR-VIS Reaffirms Ratings of Attock Cement Pakistan Limited

Karachi, June 12, 2018: 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 October 31, 2017.

The assigned ratings to ACPL incorporate moderate business risk, strong financial risk profile and adequate corporate governance framework. Financial and operational performance metrics continue to be commensurate with the benchmarks for the assigned ratings despite challenging operating environment given the supply side dynamics in the cement sector particularly in the South region where capacity enhancements over the last 6 months are substantial to alter market dynamics. 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.

Demand outlook for the sector is expected to post a stable growth on the back of ongoing infrastructure projects and demand for housing units and commercial space. However, delay in infrastructure projects due to political uncertainty (in an election year) and increase in interest rates may slightly impact projected demand growth. After witnessing significant decline during FY18, JCR-VIS expects industry margins to remain under pressure in FY19 on account of higher coal prices, rupee depreciation and expected increase in competition, particularly in the South region. ACPL’s existing market position, brand strength and diversified sales mix through extensive penetration in local and export markets would be a competitive edge in challenging times.

ACPL is currently operating with 3 production lines. A significant milestone during the ongoing year was completion of line 3 which started commercial operations effective January’2018 and has increased installed capacity to over 3m TPA (FY17: 1.83m TPA). The new production line has continued satisfactory operations for the last five months. Progress has also been noted with regards to ACPL’s plan to operate a cement grinding plant in Iraq. The plant is expected to commence operations during 1QFY19.

Assessment of financial risk profile incorporates conservative financial policy as reflected by low leveraged capital structure and strong liquidity profile as evident from favorable working capital cycle, healthy cash flows in relation to outstanding obligations and strong debt servicing ability. While pressure on margins is expected to persist, volumetric growth in sales alongwith higher efficiencies post expansion to support profitability. Debt servicing ability of the Company is projected to remain strong over the repayment period and is likely to withstand pressure on margins.

For further information on this rating announcement, please contact the undersigned (Ext: 201) or Mr. Jamal Abbas Zaidi (Ext: 516) at 35311861-70 (10 lines) or fax to 35311873.

Javed Callea

Applicable Rating Criteria: Industrial Corporates (May 2016)

Information herein was obtained from sources believed to be accurate and reliable; however, JCR-VIS Credit Rating Company Limited JCR-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.JCR-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.JCR-VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings.JCR-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 2018 JCR-VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to JCR-VIS.

JCR-VIS Credit Rating Company Limited