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Lahore, December 31, 2018 (PPI-OT): The ratings reflect the Company’s association with Lotte Corporation, one of the biggest conglomerates in South Korea, and expected group support. Promising consumer sentiment in conjunction with higher production has led to growth in revenues over the years. Ratings draw strength from the Company’s established market presence in the snacks industry and experienced management team. The Company recently commenced operations of its state-of-the-art ‘Chocopie’ plant. However, utilization remains low due to slow market pickup.
Meanwhile, margins have come under pressure recently owing to aggressive marketing campaigns to promote new products and increasing raw material costs, aggravated by rupee devaluation. The Company witnessed weak business performance owing to intense competition and losses incurred from operations. The Company has an adequate financial profile, represented by strong working capital management, moderately leveraged capital structure and weak coverages.
The ratings are dependent on the Company’s ability to improve utilization of new plant, resulting in better margins, while maintaining working capital discipline. Any deterioration in margins and/or coverages will put pressure on the ratings. Continued support from Lotte Corporation, technically and financially, is critical for ratings.
For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com