Lahore, May 30, 2022 (PPI-OT):The ratings reflect Berger’s established position and strong brand in the premium domestic paint market of the country. The ratings incorporate a strong governance framework and an experienced management team leading to effective controls. The Company’s revenue stream is well diversified with retail, non-retail and allied business segments. The paint industry remains competitive and faces pressure due to presence of large unorganized sector and ongoing economic challenges such as global inflation, supply chain disruption, hike in policy rates coupled with rupee deprecation.
Similarly, Company’s non-retail business which is dominant by automotive paints will also face pressure due to latest monetary and fiscal measures. During 9MFY22 financial performance of the Company was slightly distressed, however revenues depicted ~ 23% growth (FY21 ~ 34%) and margins showed some dilution. The financial risk profile of the Company is characterized by moderate coverages and stretched working capital cycle which is an industry wide norm. Capital structure is leveraged and borrowings are mainly comprising of short-term for working capital requirement. Apart from the conventional security structure strength, there is a comfort of Debt Payment Account mechanism, which will be funded 1/3 on a monthly basis. Also, PKR 50 million will be maintained in Debt Service Reserve Account, throughout the tenure of the Sukuk.
The ratings are dependent upon the management’s ability to sustain upheld profits and margins while improving its financial performance. Generating operating cashflows along with maintaining efficient supply chain and prudent working capital management is important.
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