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The Pakistan Credit Rating Agency Limited
Press Release

Date
07-Jan-22

Analyst
Uswa Sikandar
uswa.sikandar@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 Rating to Allah Tawaqal Metals (Pvt.) Limited

Rating Type Entity
Current
(07-Jan-22)
Action Initial
Long Term BB
Short Term A3
Outlook Stable
Rating Watch -

Founded in September 2019, Allah Tawaqal Metals (Pvt.) Limited (ATM) is involved in recycling of metals in Pakistan. It imports metals scrap for recycling to export Copper and Aluminium alloys ingots. It also trades secondary and semi-finished nonferrous and ferrous metals in local market. Pakistan’s exports of Copper and Aluminium has seen significant increase. This is largely due to increase in exports of these products for which final destination is China, largest importer of refined Copper, Copper alloys and unwrought Aluminium in particular. With respect to exports, Copper and Aluminium ingots exported to China reached a value of USD~730mln during 2020 on the back of zero rating by China under the free trade agreement signed between the two countries. Recycling of Copper and Aluminium without taking appropriate measures can be harmful for the environment. While increasing awareness about the environment may lead to more stringent regulations in the future, it could be a risk to manage. Requisite clearance is pending from Provincial Environment Protection Agency (EPA) and Ministry of Climate Change.
In 2021, Allah Tawaqal Metals (Pvt.) Ltd posted topline and net margins of PKR 2.9 billion and PKR 267 million respectively. It has an equity base of PKR 439 million due to the reported profits and total borrowings of PKR 431mln (Short term only). The market share is expected to stand around 15%. On the other hand, ATM is a family owned and operated business which exposes it to risks of having same management and ownership. The overall governance framework is at very initial stages. Company is led by young and enthusiastic management. Financial transparency needs improvement. Business is also vulnerable to regulatory disruptions owing to its pending state of affairs with Provincial Environment Protection Agency (EPA) and Ministry of Climate Change.
Adherence to environmental protection regulations, financial transparency, customer stickiness and a credit policy are imperative for the ratings in future. Improving management, governance and control environment are also very important.

About the Entity
Allah Tawaqal Metals (Pvt.) Ltd. is a private limited company incorporated in Pakistan on September 11, 2019 under the Companies Act 2017. It is family owned and operated business with shareholding divided equally among 3 members, Mr. Muhammad Mubeen Arif, Mr. Muhammad Muneeb Arif and Mr. Muhammad Umair. Mr. Mubeen Arif Jutt is the Chairman of board as well as CEO of the company since its incorporation in 2019.

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.