Karachi, February 07, 2023 (PPI-OT):VIS Credit Rating Company Limited (VIS) has assigned the initial entity ratings of ‘A-/A-2’ (Single A Minus/Single A-Two) to The Imperial Electric Company (Pvt.) Ltd (IEC). The medium to long-term rating of ‘A-’ denotes good credit quality with adequate protection factors. Risk factors may vary with possible changes in economy. The short-term rating of ‘A-2’ signifies good certainty of timely payment with sound liquidity factors and company fundamentals. Access to capital markets is good and risk factors are small. Outlook on the assigned ratings is ‘Stable’.
IEC is primarily engaged in the manufacture, installation and after-sale services of diesel generators as well as the distribution of low-voltage electrical components, lighting products and airfield lighting systems for aviation industry. Despite being in bidding process, the company has relatively stable topline and gross margins. Contribution from the manufacturing division has decreased lately due to lower volumetric output emanating from issues pertaining to procurement of imported raw materials. The company has shifted its focus on local raw materials to address the issue; the efficacy of the aforementioned initiative remains to be seen. While notable client concentration is present, the same is moderated through the long-term nature of contracts with customers.
The liquidity profile remained satisfactory owing to healthy cash flow coverages and effective working capital management. Capitalization levels remained sound as the company witnessed timeline improvement in internal capital generation whilst maintaining low debt levels. The company plans not to mobilize any long-term borrowings going forward as its production process is primarily labour-intensive. Meanwhile, a solar solutions company was acquired from own sources to tap the potential of solar energy market.
The management expects notable sales contribution from the solar company during FY24 and onwards. IEC’s business risk is considered high to medium as it has to mobilize business from the bidding process. However, the associated risk is mitigated to a certain extent given the company’s long-standing contracts with renowned multinational telecom service providers. Going forward, the ratings will be sensitive to the company’s ability to achieve topline targets whilst maintaining current capitalization and liquidity levels.
For more information, contact:
Director Compliance and Rating Analytics,
VIS Credit Rating Company Limited
VIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi, Pakistan
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: bilal@jcrvis.com.pk
Website: https://www.vis.com.pk/