VIS Maintains Entity Ratings of Kompass Pakistan (Private) Limited : AsiaNet-Pakistan

VIS Maintains Entity Ratings of Kompass Pakistan (Private) Limited

March 17, 2023 | | Share:

Karachi, March 17, 2023 (PPI-OT): VIS Credit Rating Company Limited (VIS) has maintained the entity ratings of Kompass Pakistan (Pvt.) Limited (KPL) at ‘BBB+/A-2’ (Triple B plus/A-Two). Outlook on the assigned ratings has been revised from ‘Positive’ to ‘Stable’. The medium to long-term rating of ‘BBB+’ denotes adequate credit quality with reasonable and sufficient protection factors. Moreover, risk factors are considered variable if changes occur in the economy.

The short-term rating of ‘A-2’ signifies good certainty of timely payment with sound liquidity and company fundamentals. Access to capital markets is good and risk factors are low. Previous rating action was announced on June 10, 2022.

Kompass Pakistan (Pvt.) Ltd. (KPL) is a family-owned company engaged in the manufacture of flexible packaging materials including wrappers, bags and pouches which are utilized mainly by the Fast-Moving Consumer Goods (FMCG) industry. Overall business risk remains moderate given stable demand in the FMCG sector and ability to pass on increase in raw material prices.

Assessment of financial risk profile reflects rising topline, stressed profitability margins, and weakening in liquidity and capitalization profile.

Although topline of the Company depicted sizeable growth on the back of both volumetric and price increase; net profitability margins of the Company exhibited weakening owing to lag in price adjustment on higher raw material costs, inability to fully transfer the input price hike and increase in financing charges.

Furthermore, client concentration risk is on the higher side, however, it is mitigated through long-term contracts with renowned FMCG players. With weakening in profitability profile and elevated debt levels, liquidity coverages of outstanding obligations also reduced. However, the same remains sufficient for the assigned ratings.

With debt drawdown to finance working capital needs and expansion plans, capitalization indicators increased in FY22. The same showcased improvement in HYFY23 owing to debt repayment and profit retention. Ratings are underpinned on projected improvement in profitability, liquidity and capitalization profile through planned initiatives of launching innovative products over the rating horizon.

For more information, contact:
Director Compliance and Rating Analytics,
VIS Credit Rating Company Limited
VIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi, Pakistan
Tel: +92-21-35311861-72
Fax: +92-21-35311873

The post VIS Maintains Entity Ratings of Kompass Pakistan (Private) Limited appeared first on Business News Pakistan.

Category: Business