Press Release

VIS Assigns Initial Entity Ratings to Orient Electronics (Pvt.) Limited

Karachi, March 26, 2019: VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘A/A-2’ (Single A /A-Two) to Orient Electronics (Pvt.) Limited (OEL). The medium to long-term rating of ‘A’ denotes good credit quality coupled 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 payments. Liquidity factors and company fundamentals are considered sound. Outlook on the assigned ratings is ‘Stable’.

OEL is a well-known manufacturer of home appliances in Pakistan. Shareholding of the company is vested with the sponsoring family who have over six decades of experience in the consumer electronics industry. OEL is virtually a wholly owned subsidiary of Orient Color Labs (Pvt.) Limited and a part of Orient Group of Companies. The business model of OEL revolves around the manufacturing, assembling, and sale of a wide range of home appliances, including air conditioners, refrigerators, deep freezers, LED TVs, water dispensers and microwave ovens under the brand name 'Orient'. The production facility is located in Lahore.

The assigned ratings take into account extensive experience of sponsors in the consumer electronics industry that has helped OEL maintain healthy relations with the vendors and dealers. The ratings draw comfort from sizeable scale of operations with steadily growing sales and improving gross margins, considerable geographic diversification, strong brand equity and positive demand for air conditioners and refrigerators. Albeit current ratio has room for improvement, financial risk of the company is considered moderate as depicted by manageable gearing and leverage indicators and adequate debt service coverage.

The ratings however, factor in dynamic consumer preferences for electronics goods, high price sensitivity, and vulnerability to foreign exchange risk amidst low pricing power, and weak corporate governance. The company’s ability to enhance scale of operations, improve profit margins, and maintain leverage indicators around current levels would remain important for the ratings.

For further information on this rating announcement, please contact undersigned or Mr. Maimoon Rasheed at 021-35311861-70/ 042-35723411 or fax to 021-35311872-3.

Javed Callea

VIS Entity Rating Criteria Industrial Corporate (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 not an NRSRO and its credit ratings are not NRSRO credit ratings.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 2019 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

VIS Credit Rating Company Limited