The Pakistan Credit Rating Agency Limited
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Uswa Sikandar

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PACRA Upgrades Entity Ratings of Allah Tawaqal Metals (Pvt.) Limited

Rating Type Entity
(28-Dec-22 )
(07-Jan-22 )
Action Upgrade Initial
Long Term BB+ BB
Short Term A3 A3
Outlook Stable Stable
Rating Watch - -

Founded in September 2019, Allah Tawaqal Metals (Pvt.) Limited (ATM) is involved in recycling of metals in Pakistan. It imports metal scrap for recycling and exports Copper and Aluminium alloys ingots. It also trades secondary and semi-finished nonferrous and ferrous metals in local market. The exports of Copper and Aluminium have been increasing in recent years for which final destination is China, largest importer of refined Copper, Copper alloys and unwrought Aluminium in particular. 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. The company has obtained requisite clearance from Provincial Environment Protection Agency (EPA), Punjab. As per management accounts, Allah Tawaqal Metals (Pvt.) Ltd posted topline of PKR ~ 7 billion while maintaining its profit margins in FY22. It has an equity base of PKR 1.072 billion due to the reported profits and total borrowings of PKR 760mln (Short term only). Steps taken by management to improve financial transparency coupled with impressive growth in topline of 140% led towards ratings upgrade. The market share is expected to stand ~ 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 initial stages. Company is led by young and enthusiastic management. Financial transparency needs further improvement. Business is vulnerable to regulatory disruptions and volatility in commodity prices in international market as well as issues of stuck-up consignments due to delays in opening and clearance of Letters of Credit.
Sustainability of revenues, 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.