The Pakistan Credit Rating Agency Limited
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Muhammad Hassan

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PACRA Maintains Entity Ratings of NIMIR Industrial Chemicals Limited

Rating Type Entity
(18-Jan-19 )
(19-Jul-18 )
Action Maintain Initial
Long Term A A
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

The ratings of Nimir Industrial Chemicals Limited demonstrate its strong position in domestic manufacturing of oleo chemicals and chlor alkali products, solid customer base of multinational FMCGs, strong margins, generation of persistent profitability, and former association with American’s owned Knightsbridge Group. Established as a listed entity, a well-devised governance framework is in place. The company has established a distinguished position in its operating segment through provision of high quality products to large-scale multi-national companies. Additionally, growing demand for consumer products and company’s abilities to expand its capacities to cope with the demand bodes well for business prospects of the company. Advanced production facilities alongside experienced management team transpire into operational efficiencies. Capitalizing on a topline-driven approach, the company has been expanding its business volumes since take over by the current shareholders. The recent advancement and upgradation of the plant has been completed in FY18. Well-devised pricing strategy indexed with dollar rates hedges against exchange risk, since the company imports various palm oil products as its major raw materials. Sustenance of healthy margins with adequate leveraging and strong coverages are important for ratings, going forward.

The ratings are dependent on sustaining strong margins and profitability in line with business expansion; prudent management of liquidity profile and maintenance of strong coverages amidst expansion are important for the ratings.

About the Entity
Nimir Industrial Chemicals Limited was incorporated in 1994 as a Public Limited Company, under the Repealed Companies Ordinance, 1984. The Company is involved in the manufacturing and sale of oleo chemicals and chlor alkali products including distilled fatty acid (DFA), soap noodles, stearic acid, glycerin, caustic soda and a variety of industrial chemicals. The head office of the company is situated in Lahore whereas its plant site is located in Sheikhupura. The plant currently operates with an annual capacity of ~85,000 metric tons for oleo chemical products and ~55,000 metric tons for chlor alkali products.

The Company is a subsidiary of Nimir Resources (Pvt) Limited, which holds ~57% of the total
shares of the company. The Board of Directors includes ten members including the CEO - Mr. Zafar Mehmood who has vast experience in the relevant field. He is supported by a team of qualified professionals - most of them are long associated with the company.

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.