The Pakistan Credit Rating Agency Limited
Press Release


Ahsan Zahid

Applicable Criteria

Related Research

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 Maintains the Entity Ratings of Cherat Cement Company Limited

Rating Type Entity
(28-Dec-22 )
(28-Dec-21 )
Action Maintain Upgrade
Long Term A+ A+
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

Cherat Cement’s Ratings reflect its prominent presence in the cement sector emanating from its major market share (~7%) predominately in the north region. The latest period reported a reduction in cement production reflecting on economic downturn. Increase in prices of all the construction materials has impacted demand for cement as well. However, cement’s demand is expected to come full circle once the macro level fundamentals improve. Though, industry wide volumetric decrease in sales has been reported but better selling prices have absorbed their impact. Consequently, company’s revenues soared to PKR 9,050mln & PKR 32,085mln at the end of 1QFY23 & FY22 respectively (1QFY22: PKR 7.16bln, FY21: PKR 25.21bln). Company managed to improve margins in said period on back of efficient cost management enhanced through recently added captive solar power plant. The Company's leveraging is currently at an adequate level, especially with the repayments being made. Moreover, keeping in view the economic turndown the management has decided to delay the greenfield expansion project. The financial risk profile incorporates liquidity profile, evident from healthy cash flows and improved coverages. Further, the Ratings assigned to Cherat Cement also draw support from the strong financial profile of the Company’s sponsor, Ghulam Faruque Group having a presence across multiple sectors mainly including Cement, Sugar, Packaging, Software Solutions, Air Conditioning and specialized engineering equipment.
The ratings remain dependent on upholding company's market position along with sustenance of business volumes, margins and achieving optimal utilization of production capacities. The company's good business performance as compared to other players in current stretched economic scenario - challenges on demand front - remains vital for ratings.

About the Entity
Cherat Cement - a Ghulam Faruque Group (GFG) Company - commenced operations in 1985. The company is engaged in the manufacturing, marketing and sale of Ordinary Portland Cement. The company is majority owned by GFG through associated companies and family members. The overall control of the company vests in eight member Board of Directors (BoD), including the CEO. The BoD comprises six non-executive directors, including three independent directors, out of which three are Ghulam Faruque family members including the CEO. Mr. Azam Faruque, the CEO, is the grandson of Mr. Ghulam Faruque, and has been associated with the company since 1992. Mr. Faruque is supported by a team of professionals with relevant experience in the cement industry.

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.