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Pakistan Credit Rating Agency Limited assigns entity rating of “BB” (Double B), short term rating of “B” (B) to Maple Leaf Cement Factory Limited

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by January 29, 2013 General

Lahore, January 29, 2013 (PPI-OT): The Pakistan Credit Rating Agency Limited (PACRA) has assigned a long term entity rating of “BB” (Double B) and short term rating of “B” (B) to Maple Leaf Cement Factory Limited. Meanwhile, Sukuk issue of PKR 8,000mln has been assigned a rating of “BB+” (BB Plus).

These ratings denote that there is a possibility of credit risk developing, particularly as a result of adverse economic change over time; however, business or financial alternatives may be available to allow financial commitments to be met. The ratings reflect MLCFL’s improving business margins, in turn profitability, an outcome of higher retention prices, supported by favourable local demand.

The management, while expecting continuity of prevailing industry dynamics, intends to strengthen its market position by optimizing its brand and distribution network. The ratings are, however, constrained by weak financial profile of MLCFL.

The company has a highly leveraged capital structure, wherein sizable upcoming loan repayment maturity magnifies stress on debt service coverage’s. Comfort is drawn from steady improvement in cash flows that are largely aligned to lately restructured debt repayment schedule. In this regard, the company’s ability to preserve its business margins besides effective utilization of available capacity would remain important.

The ratings are dependent on the sufficient internal cash generation to stay current on committed debt obligations. Meanwhile, any significant weakening in cement prices, increase in input costs, and/or fall in product demand may put additional pressure on overall risk profile of the company.

For more information, contact:
Hammad Rashid
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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