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PACRA Maintains Entity Ratings of Multi Resin Industries

Lahore, January 03, 2023 (PPI-OT):Multi Resin Industries (‘MRI’ or ‘the Firm’) is primarily engaged in the manufacturing and sale of industrial resins, characteristically used across a wide range of corporate sectors in Pakistan. The ratings reflect firm’s emerging presence in chemical industry underpinned by the supply of a diversified product portfolio to create value for its clients and support sustainable development. The growth of this industry relies on overall economic progress and infrastructural activities, major contribution coming from paints and coating and textile, expected to grow at a CAGR of 15% and 5%, respectively.

Resin manufacturing industry is highly competitive owing to unorganized small producers, consequently impacting margins for large scale producers. The segment is mostly price taker, given high reliance on imported raw material and offtake of finished goods is in the local market. The industry is prone to global supply-chain disruptions owing to high reliance on imported raw materials. Barriers to entry for new competitors are quite low on account of minimal capital requirements and uncomplicated production process. Resins are mainly made of different oil derivates with strong linkage to international oil prices subject to high volatile sector.

The key opportunities are generically available to the firm in textile domain for the supply of finishing, wetting and sizing agents, pigment and printing dying binders, and denim coating products. Resultantly, MRI captures market share of around ~15% in Pakistan’s Water Base Emulsion Industry. MRI’s concentration risk stands moderate as it doesn’t hold any customer that constitutes more than 10% of the total revenue. Ownership structure of the firm is majorly represented by family members. The management intends to materialize the envisaged strategies by enhancing the production capacity, followed by commencement of in-house production of packaging materials, and transforming the status of partnership concern into Private Limited Company in longer run.

Financial profile of the firm is considered adequate with comfortable coverages, upright working capital management and healthy cash flows. MRI’s capital structure is moderately leveraged, merely encompassed of short-term borrowings. Implementation of good governance structure is required to ensure compliance at all levels and smooth running of operations.

The ratings are dependent on the firm’s ability to sustain its position amidst changing business environment and management’s ability for successful strategy execution pertaining to corporatization. With growth in firm’s volume; prudent financial performance and effective liquidity profile shall remain imperative.

For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com

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