The Pakistan Credit Rating Agency Limited
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Ayesha Qasim

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PACRA Assigns Initial Entity Ratings to Nimir Resins Limited

Rating Type Entity
(19-Jul-18 )
Action Initial
Long Term A-
Short Term A2
Outlook Stable
Rating Watch -

The ratings reflect Nimir Resins Limited's ("the company") revived position and ensuing profitability subsequent to its takeover by Nimir Group. Established as a listed entity, a well-devised governance framework is in place in compliance with corporate governance requirements for listed companies. Shareholding pattern, however, displays a composite outlook. Experienced management team alongside effective production facilities transpire into operational efficiencies enabling the company to turn around its operations and now focus towards growth. The company operates in a competitive segment reflected by its relatively narrow margins and thin profitability. The management intends to diversify product line to serve other sectors including paint, textile and paper, which bodes well for the business prospects of the company . Acquired by Nimir Group in Jan-2016, the management's primary focus was pivoted towards consolidating the company's deteriorated position; considerable achievement has been attained in this regard. The company is now keen on increasing its business volume and margins. The financial profile of the company is characterized by strong coverages and adequate leveraging. External funding majorly constitutes short term loans. Going forward, growth in business would necessitate prudent management of margins, debt mix and sufficient internal capital formation.

The ratings are dependent upon sustenance of profits and improving margins while establishing strong foothold in the related segments. Rational management of liquidity profile to maintain strong coverages is important for the ratings. Deterioration in margins, leading to erosion of profitability, and/or coverages will have negative impact on the ratings.

About the Entity
Nimir Resins Limited was initially incorporated in 1964 as a Private Limited Company under the Companies Act, 1913 (now the Companies Act, 2017) and was converted into a Public Listed Company in 1991. In 2010, the Company's name was changed to "Descon Chemicals Limited" when it entered into an amalgamation arrangement with Descon Chemicals (Pvt) Limited. Subsequently in 2016, the Company was re-acquired by Nimir Group. The primary business of the company is manufacture and sale of surface coating resins, polyesters, textile, paper auxiliaries and optical brighteners. The head office of the company is located in Lahore, whereas its registered office is located in Sheikhupura.

The Company is a subsidiary of Nimir Industrial Chemicals Limited. Board of Directors constitutes seven members including the CEO - Mr. Zafar Mehmood - who is also the CEO of Nimir Industrial Chemicals Limited. Mr. Zafar is one of the pioneers of the Group and has over ~25 years of experience in the relevant field. He is supported by a team of qualified and experienced professionals - most of them have been in long association with the group.

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.