The Pakistan Credit Rating Agency Limited
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Anam Waqas Ghayour

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PACRA Maintains Entity Ratings of Jamal Pipe Industries (Pvt.) Limited

Rating Type Entity
(15-Jul-22 )
(16-Jul-21 )
Action Maintain Maintain
Long Term BBB BBB
Short Term A2 A2
Outlook Stable Stable
Rating Watch - -

Jamal Pipes Industries (Pvt.) Limited, a family operated business, is engaged in manufacturing of pipes and allied products for four decades. The Company's product slate includes black line pipes, galvanized line pipes, variety of poles (octaconical poles, tubular poles and street light poles) and guardrails. Around 47% is contribution from poles while remaining 53% arises from pipes and guardrails. Diversification in product slate is considered positive while further strengthening of revenue from each products would reduce concentration and add cushion to business risk profile. The Company has been catering to the demand of corporate projects since last many years and enjoys association with corporate clients. The ratings reflect an adequate market presence of the Company in a highly fragmented industry. Over the last few years, the Company's business risk profile has strengthened on account of better volumetric sales. However, due to the increase in Hot Rolled Coil (HRC) prices – the basic raw material, along with increased energy prices, policy rates and slowdown in economic growth the capacity utilization of JPI expected to reduce going forward. To finance working capital needs amidst rising input costs, short term leverage indicators trended upwards in the coming year. During the period 9MFY22, Jamal Pipe recorded sales revenue of PKR ~2,205mln (FY21: PKR ~2,718mln) along with the gross profit and net profit of PKR ~227mln & PKR ~70mln (FY21: PKR ~278mln & PKR ~91mln) respectively. The Company leveraging stood at 40.7% (FY21: 43.9%) constituting 100% short term borrowings to support working capital - inherent need of the business model followed by the Company. The Company has an explicit policy of not raising any long-term debt. The ratings incorporate four decades of long association of sponsors’ family with the same industry.
The ratings are dependent upon the Company’s ability to sustain and improve its business profile in the wake of challenges in current diluted economic scenario. Herein, effective and prudent management of financial risk indicators & improvement of business margins through operational efficiencies remain important.

About the Entity
Jamal Pipes Industries (Pvt) Limited was incorporated in 1981. The Company is wholly owned by the sponsors family with equal shareholding held by Mian brothers – Mr. Mian Farooq Ahmed and Mr. Mian Shakeel Ahmed. The overall control of Company vests with two members' board of directors. Mr. Farooq Ahmed - the Chief Executive and Mr. Shakeel Ahmed - Executive Director are equipped with necessary technical skills to manage and oversee the business. Mr. Zubair Ahmed – (CA finalist) is the CFO of the Company and has been associated with the Company since around last four years.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.