Press Release

VIS Assigns Initial Ratings to Allied Industries Hub (Pvt.) Limited
 

Karachi, Jun 28, 2019: VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘BBB/A-2’ (Triple B/A-Two) to Allied Industries Hub (Pvt.) Limited (AIHPL). Outlook on the assigned ratings is ‘Stable’. The long term rating of ‘BBB’ signifies adequate credit quality; protection factors are reasonable and sufficient. Risk factors are considered variable if changes occur in the economy. The 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.

Incorporated in 1982 as a private limited company, AIHPL is principally involved in the manufacturing and sale of copper rod, copper wires and cables. The assigned ratings incorporate AIHPL’s market position as one of the leading market players in the copper cable industry along with adequate liquidity and profitability indicators. Ratings also reflect extensive experience of sponsors, diversified product portfolio and state-of-the art manufacturing technology that provides competitive edge to the company. Business risk profile is underpinned by growing demand for wires & cables and increased focus of the government to document the informal sector. With company being a private limited entity, board and senior management comprises experienced family members. Going forward, ratings will remain dependent on achieving projected business growth and margins, while maintaining cash flow coverage and leverage indicators within projected financial projections.

The wiring & cable industry is characterized by significant competition with existence of few large players in organized sector and numerous small unorganized firms. Business risk profile is supported by stable and growing demand for wires & cables in the country from housing, energy, automotive, construction and other segments. However, intense competition exists in the retail market segment from informal manufacturers in the unorganized sector operating domestically. With increased focus of the government to document the economy, the market share of the organized market players is expected to increase going forward.

Allied Industries Hub (Pvt.) Limited (AIHPL) is a part of Allied Group, the only group in the country with vertically integrated setup ranging from manufacturing of copper rod from copper scrap and copper cathode to development of transformers. Net sales of the company have grown at Compound Annual Growth Rate (CAGR) of 3.8% in the period from FY16-FY18. Growth in net sales was a function of a combination of increase in average selling price and volumetric growth. Liquidity profile draws support from adequate cash flows in relation to outstanding obligations. Leverage indicators are on the higher side vis-à-vis peers largely due to carrying of inventories.

For further information on this rating announcement, please contact Mr. Javed Callea (Ext: 201) or Mr. Narendar Shankar Lal (Ext: 203) at 021-35311861-71 or fax to 021-35311872-3.


Javed Callea
Advisor

Applicable Rating Criteria: Industrial Corporates (May 2016)
https://s3-us-west-2.amazonaws.com/backupsqlvis/docs/Corporate-Methodology-201605.pdf

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

VIS Credit Rating Company Limited (Formerly JCR-VIS Credit Rating Company Limited)