PACRA Places Entity Ratings of H. Sheikh Noor-ud-Din and Sons (Private) Limited on Rating Watch – Developing

Lahore, February 01, 2019 (PPI-OT): H. Sheikh Noor Ud Din and Sons (HSNDS), manufacturing arm of NRS International, is primarily engaged in manufacturing of relief items and health items for international donor agencies. The ratings incorporate company’s long term association with international donor agencies such as UNHCR, UNESCO, Red Cross, and others. The company manufactures Long Lasting Insecticidal Nets (LLIN) under brand name DawaPlus®. Approved by World health Organization, it is the second most used LLIN with over 35% market share in the world. LLIN represents over 60% share of revenues of the company.

The company’s long term contracts along with strong margins provide comfort to sustainable healthy profitability. To cater the volatile needs of the relief industry, HSNDS has to maintain higher inventory levels which in turn give rise to higher capital needs. Increased working capital needs caused the short term borrowings to rise, impacting overall financial profile of the company. However, with repayment of capex related lease liabilities overall leveraging remains moderate. The company enjoys good debt coverages.

Prudent management of working capital, while keeping efficient inventory levels to manage relief industry needs will be important. Meanwhile, strengthening of governance framework and financial transparency for better oversight of strategic affairs is considered essential. Adherence to agreed upon financial matrices (Short term borrowing to Net working capital (less than) 70%, cash debt coverages of above 2.5x) will remain critical.

The entity is undergoing reorganization after which part of its assets will be segregated. PACRA has placed entity ratings of the company on Rating watch and continues to monitor the progress. The above mentioned process is expected to complete in near future and action will be taken accordingly.

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

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