PACRA Upgrades the Entity Ratings of H. Sheikh Noor-ud-Din & Sons (Private) Limited

H. Sheikh Noor-ud-Din & Sons (Private) Limited (“The Company” or “HSNDS”) is a family-owned entity that serves as the manufacturing and production arm of NRS Relief which is primarily engaged in the production and sale of a wide range of innovative relief products (tents, tarpaulins, canvas, mosquito nets, and other items) for humanitarian organizations. The family transaction was completed at the end of 2023, resulting in some changes in the ownership structure of the company. The sponsors have strong industry-specific knowledge & expertise. The financial strength of the entity is considered adequate as apart from the relief industry, the sponsors are also involved in other businesses like; edible oil manufacturing, poultry, and dairy products. HSNDS has sponsors dominant board. The governance of the Company is considered adequate and requires augmentation. Sales of the industry are majorly made to relief organizations worldwide. Recent global conflicts and increases in natural calamities have increased the global demand for relief equipment creating avenues for growth for HSNDS as reflected by the commendable growth of 196% YoY in the top line of the company mainly on the back of timely bidding for new contracts of international relief agencies after the resolution of ownership conflict. Relief tents remain their primary product followed by tarpaulin and mosquito nets. The Company’s gross profitability margin diluted slightly but the net profitability margin increased significantly on the back of complete deleveraging resulting in a reduction in finance cost enabling the company to register a hefty bottom line. The management of the Company is actively following its financial projections to achieve its future top-line targets. The financial risk profile of the Company has improved significantly and derives its strength from the deleveraged capital structure consequent to the repayment of the entire debt portfolio of the company. This improvement in the financial risk profile of the company is considered imperative for the upgraded ratings. The working capital management of the Company has also improved on the back of improved credit terms with the buyers. The company has generated healthy cash flows during the year. The ratings incorporate the Company’s long-term association with international donor agencies such as the UN, UNHCR, UNICEF, Red Cross, etc. Adequate support from sponsors and other group businesses remains a key rating factor. Going forward, maintaining a deleveraged capital structure and sustainability of the growth trajectory in the top line and profitability remain essential for the sustainability of the ratings.
The sustainability of ownership and new governance structure, sustainable growth in sales volumes, and stability in margins remain critical for ratings. Any deterioration in coverages and cash flows of the Company remains critical for the ratings.

About the Entity
H. Sheikh Noor-ud-Din & Sons (Private) Limited (the Company) was incorporated in 1979 as a private limited company in Lahore, Pakistan. Overall control rests with a three-member board comprising Mr. Farhaj Sarwar is the CEO of the Company and is accompanied by his two brothers and a team of professionals.