Lahore, September 10, 2021 (PPI-OT):Bestway Cement’s ratings reflect its leading position in the market emanating from its high market share in north region. The Company’s brown field expansion and successful mergers in the past assisted to maintain its position. Economic activities have resumed despite continuing vicissitudes of COVID 19. Growth in local capacity utilization depicts the sector’s resilience to the impacts amid country wide lock down observed due to COVID-19 outbreak. This resulted in improved demand along with pricing implications supporting margins.

Furthermore, curtailed policy rates and better cement prices giving the required supporting environment to flourish. By keeping in view the current phase of expansion and to maintain its position in competitive environment, Bestway plans for Greenfield expansion and decided to establish a plant with capacity of 7,200 tonnes of clinker per day along with 9MW WHRP. In FY21, the Company picked up pace and report profits in line with the cement industry trend. Significant increase in sales has been observed along with better margins. During 9MFY21, Bestway Cement recorded Net profit of PKR 8.3bln against Net loss of PKR 20mln in 9MFY20.

The Company’s ratings are strengthened by the sustainable dividend income from its strategic investment in United Bank Limited (UBL) in which company is holding 7.65%. The company’s financial risk is categorized by efficient working capital management in terms of both cashflows and short-term borrowing. Coverages have been improved sizably as the FCFO’s showed improvement in 9MFY21. The company has re-profile its debt book by converting short term debt into long term debt which will not impact the leveraging ratio and have positive impacts on current ratio. The Company’s business performance with local demand remains vital with focus on sustaining margins.

The ratings also draw comfort from the strong sponsor support (Bestway Group). The ratings are dependent on upholding of company’s leading market position along with sustenance of business volumes and margins. The company’s good business performance as compared to other players in current stretched economic scenario – challenges on demand front – remains vital for ratings.

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