PACRA Maintains Entity Ratings of Askari Cement Limited

Lahore, November 16, 2018 (PPI-OT): Askari Cement’s ratings reflect its sustained position in the cement industry. The Company has two existing cement manufacturing units (Nizampur and Wah) – operating with combined capacity of 2.8mln tpa. Over the last few years, the company was able to maintain growth trajectory trend in revenue, supported by strong cement sector fundamentals. The company’s margins witnessed decline, in recent year, on account of surge in coal prices and dip in cement prices.

It is vital for management to uphold business profile of the company by sustaining margins and improving volumes. The upcoming projects include BMR at Nizampur plant and WHR at Wah plant. Hence, currently financials are moderately leveraged. However, cashflows provide good coverage to anticipate repayment. Going forward, leveraging is expected to remain at comfortable level. The ratings take comfort from strong financial strength of Fauji Foundation – third largest sponsoring group in the cement industry.

The ratings are dependent on current positioning of the company’s business besides financial risk profile; strengthening of equity base is essential. Any significant deterioration in the sector’s outlook particularly any slowdown in economic growth, interest rate fluctuation and delay in infrastructure projects may affect the ratings. Industry’s dynamics encompassing expected challenges of supply glut, substantial decline in local demand or deterioration in cement prices will negatively affect the ratings.

For more information, contact:
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

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