Lahore, July 18, 2022 (PPI-OT): The ratings reflect Nimir Resins Limited’s (“NRL” or “The Company”) solid business profile. Established as a listed entity, a well-devised governance framework is in place along with a skilled and experienced management team and modern production facilities. The Company has primarily three production lines, catering to different industries of the economy. These are essential ingredients for textile, paper and packaging and paint industries. The client base reflects good names. Nimir Resin also furnish synergistic benefits and also other efficiency due to being owned and operated by the Nimir group.
Demand drivers of these industries are closely linked with economic growth and construction / infrastructure developments. Overall construction industry registered ~14% growth during FY22 mainly on account of urbanization trends followed by growth in the agriculture sector, which is also evident from the recent financial performance of the Company. Despite significant inflationary pressure, supply chain disruption and rupee devaluation NRL’s margins remain intact, demonstrating their ability to pass on the effect of cost escalation. In the recent budget, the government has announced sales tax exemption on the import of construction machinery, equipment, and specialized vehicles this will eventually beef up the economic activity in the Country.
The financial risk profile of the Company is characterized by moderate coverages, cashflows, and stretched working capital cycle which depicts the industry norm. Capital structure is moderately leveraged where borrowings are mainly comprised of short-term to meet the working capital requirements. The KIBOR has increased up to 15%, further elevating the debt service cost in the future. The Company has generated sufficient cash flows to meet the BMR requirement for capacity expansion. Going forward, growth in business would necessitate prudent management of margins, debt mix, and sufficient internal capital formation. The ratings take comfort from the NRL’s association with Nimir group of Companies.
The ratings are dependent on sustainable growth in the top-line and bottom-line with upheld margins, and market share while retaining sufficient cash flows and coverages. However, prudent financial management and maintaining sufficient liquidity under stressed economic conditions will remain important 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