Karachi, December 21, 2023: VIS Credit Rating Company Limited has reaffirmed the entity ratings of CBM Plastics Private Limited (‘CBM’) at 'BBB+/A-2' ('Triple B-plus'/'A-Two'), signifying adequate credit quality and good certainty of timely payment, a news release by VIS Credit Rating Company Limited. The stable outlook reflects the company's sound liquidity and fundamentals, with the previous rating action announced on November 22, 2022.
According to VIS Credit Rating Company Limited, CBM Plastics, a key player in Pakistan's plastics industry since 1992, specializes in the production and domestic sale of plastic containers and packages. Its product range, primarily catering to the lubricant oil industry, includes blow-molded plastic drums, containers, jerry cans, caps, and closures. The family-owned business operates from the S.I.T.E industrial area in Karachi, with manufacturing plants on plots # F-21 and # X-7/B. Over 60% of the company is owned by two family members, with the remaining shares distributed among twelve other members.
The assigned ratings take into account CBM's moderate business risk profile, influenced by exchange rate volatility and moderate margins, offset by limited competition and a low risk of new market entrants. The industry's reliance on High-Density Polyethylene (HDPE) imports exposes it to price volatility and exchange rate fluctuations.
Financially, CBM's performance in FY23 showed a strengthened gross margin due to successful cost pass-through to customers, alongside an increased topline. However, net margins faced pressure from rising finance costs attributable to local policy rate hikes. The company observed a marginal improvement in capitalization metrics, with a slight decrease in gearing and leverage ratios. CBM's ability to maintain a stable liquidity profile and a historically healthy coverage profile were also noted as positive factors supporting the ratings.
Looking ahead, the company's ratings will be influenced by its ability to bolster profitability and improve its capitalization and liquidity metrics.
For more details on this rating announcement, inquiries can be directed to Mr. Saeb Muhammad Jafri (Ext: 202) or the undersigned (Ext: 201) at VIS Credit Rating Company Limited at 021-35311861-64 or via email at firstname.lastname@example.org.