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The Pakistan Credit Rating Agency Limited
Press Release

Date
03-Jan-22

Analyst
Sohail Ahmed Qureshi
sohail.ahmed@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Assigns Initial Entity Ratings To Multi Resin Industries

Rating Type Entity
Current
(03-Jan-22)
Action Initial
Long Term BBB-
Short Term A2
Outlook Stable
Rating Watch -

Multi Resin Industries (hereafter referred to as ‘MRI’) is primarily engaged in the manufacturing & sale of industrial resins, characteristically used across a wide range of corporate sectors in Pakistan. The ratings reflect firm’s emerging presence in chemical industry underpinned by the supply of a diversified product portfolio to create value for its clients and support sustainable development. The growth of this industry relies on overall economic progress and infrastructural activities, major contribution coming from paints & coating and textile, expected to grow at a CAGR of 15% and 5%, respectively. Resin manufacturing industry is highly competitive owing to unorganized small producers, consequently impacting margins for large scale producers. The segment is mostly price taker, given high reliance on imported raw material and offtake of finished goods is in the local market. The industry is prone to global supply-chain disruptions owing to high reliance on imported raw materials. Barriers to entry for new competitors are quite low on account of minimal capital requirements and uncomplicated production process. Resins are mainly made of different oil derivates with strong linkage to international oil prices subject to high volatile sector. The key opportunities are generically available to the firm in textile domain for the supply of finishing, wetting & sizing agents, pigment & printing dying binders, and denim coating products. Resultantly, MRI captures market share of around ~15% in Pakistan's Water Base Emulsion Industry. MRI’s concentration risk stands moderate as it doesn't hold any customer that constitutes more than 10% of the total revenue. Ownership structure of the firm is majorly represented by family members. Going forward, the management intends to materialize the envisaged strategies by enhancing the production capacity, followed by commencement of in-house production of packaging materials, and transforming the status of partnership concern into Private Limited Company in longer run. Financial profile of the firm is considered adequate with comfortable coverages, upright working capital management and healthy cash flows. MRI’s capital structure is moderately leveraged, merely encompassed of short-term borrowings. Implementation of good governance structure is required to ensure compliance at all levels and smooth running of operations.
The ratings are dependent on the firm’s ability to sustain its position amidst changing business environment and management’s ability for successful strategy execution pertaining to corporatization. With growth in firm’s volume; prudent financial performance and effective liquidity profile shall remain imperative.

About the Entity
Multi Resin Industries is a Partnership Firm established in 1997 as a firm registered under Partnership Act, 1932. The principal business activity is manufacturing of chemicals, including Adhesive Emulsion, Homo Polymer, Co-Polymers, Cross linking Agent, Acrylates-based dispersion, pure Acrylates and Styrene modified Acrylates under the brand name of ‘Multiteck’ for Textile, Paint, Paper & Packaging, Construction, Leather and Wood sector.
The Firm’s ownership solely lies with the sponsoring family. Mr. Farooq Ahmed (Chairman) owns a slightly highest share (14.50%), brothers Mr. Anees, Mr. Masood, Mr. Khalid, Mr. Asif & Mr. Arif are equal co-partners (14.25%), and wife of Chairman, Ms. Naila Zareen also shares equal stake in the business (14.25%). Mr. Muhammad Anees (CEO) is associated with the firm since its inception & holds industrial experience of 20+ years. He is assisted by a qualified team.

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.