The Pakistan Credit Rating Agency Limited
18-Dec-18
Analyst
Sehar Fatima
sehar.fatima@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
- Methodology | Corporate Ratings | Jun-18
- Methodology | Criteria | Rating Modifier | Jun-18
- Methodology | Correlation Between Long-Term And Short-Term Rating Scale | Jun-18
Related Research
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PACRA Maintains Entity Ratings of Pioneer Cement Limited
| Rating Type | Entity | |
|
Current (18-Dec-18 ) |
Previous (07-May-18 ) |
|
| Action | Maintain | Maintain |
| Long Term | A | A |
| Short Term | A1 | A1 |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
The ratings reflect Pioneer Cement’s healthy business profile. The company has been operating a single manufacturing facility. The Company’s sales are majorly driven by local market fundamental – an industry wide phenomenon. During FY18, industry dynamics have shifted significantly on account of lower retention prices, surged international coal prices, increase in FED on coal import. The aforementioned factors have affected the company’s sales. The upcoming energy projects (12MW WHRPP and 24MW coal power plant) are likely to assist bottom-line in future through power cost savings. The company’s brown-field expansion – 2.2mln tpa – is expected to commission in 4QFY19. This will supplement company’s business profile given higher capacity utilization and adequate channeling of production. The leveraging is expected to surge in medium term on account of debt-driven expansion. Timely commissioning of new line is considered vital for the ratings. The ratings also draw comfort from sponsor's financial strength.
The ratings are dependent on the management's ability to (i) uphold margins, and (ii) optimal utilization of existing lines. Timely repayment of long term financing is essential. The company's improved business performance in current stretched economic scenario - challenges on demand front - remains vital for ratings.
About
the Entity
Pioneer Cement is an affiliate of Mega group. The group owns 47% stake in Pioneer Cement through Vision Holding Middle East Limited. The group, led by Mr. Habibullah Khan, has key interest in shipping and logistics business, in addition to exposure in real estate, ports terminal), food and energy sectors. Pioneer Cement is listed on PSX and has a well spread shareholding pattern.
The overall control of the Company vests in eight-member board of directors including the MD/CEO. Four non-executive directors represent Mega group, two are independent members, while remaining two are executive directors. The lately appointed MD, Mr. Arif Dar, is Chartered Accountant and carries over three decades of diverse experience. He is supported by an experienced management team.