PACRA assigns Initial Entity Ratings to EXIDE Pakistan Limited

Lahore, July 11, 2018 (PPI-OT): EXIDE Pakistan Limited (EXIDE) is a pioneer in the battery industry; has a presence in Pakistan since 1968. The ratings take comfort from demand of batteries emanating from UPS market in addition to transport and personal vehicles and others. The competition has intensified due to improving power supply and entry of new players in the market. The overall industry has an oversupply and margins are under stress. Demand has seen a downward trend lately but may positively benefit if power demand overtakes the supply, especially when CPEC related projects pick up.

The big three players hold about 75% of the market while the remaining is held by numerous smaller ones. Success is pivotal on maintaining market share. The sponsors have a good understanding of the business. The company’s profitability which has been healthy in the past, got hit recently due to slowing industry sales and eroding business margins.

EXIDE’s leveraging is good and the company doesn’t want to raise long term debt. Improving working capital management and strengthening debt servicing capacity through improving cash position is pivotal for the ratings.

The ratings are dependent on sustaining a steady revenue stream with profitable operations. Any prolonged downturn in subdued business volume amidst market oversupply can have a detrimental effect.

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