Karachi: Ana and Batla Industries (Private) Limited (ABI), a key player in Pakistan’s hygiene product market, has had its credit ratings reaffirmed by VIS Credit Rating Company Limited (VIS) at ‘BBB/A-2’ for medium to long-term and short-term obligations respectively. The outlook for these ratings has been marked as stable, reflecting the company’s sustained demand for its primary product, baby diapers, among other hygiene products.
According to VIS Credit Rating Company Limited, the ratings underscore ABI’s moderate business risk profile which is buoyed by stable demand dynamics, particularly in the baby diaper segment. The company has successfully navigated the local market by diversifying its product range which includes sanitary napkins, adult diapers, and personal grooming items. This strategic positioning has allowed ABI to capture a significant share of the market, previously dominated by imports, benefiting from favorable governmental policies on import restrictions and duties.
The financial performance of ABI saw a rise in revenue during FY23, primarily due to price adjustments across its product line. However, the company faced challenges with sales volumes in secondary products and increased finance costs, which affected net margins. In the first nine months of FY24, ABI reported further revenue growth driven by higher sales volumes, though profit margins were squeezed by inflationary pressures. Additionally, ABI has been exploring new export opportunities and introduced a premium range in the local market, aiming to further penetrate and capture new segments.
Despite a robust revenue stream, ABI’s debt coverage levels saw a slight decline, although its liquidity profile remains strong, supported by an improved cash conversion cycle. The company has continued its strategy of retaining profits to bolster equity and reduce debt, maintaining a policy of no dividend disbursements to support a debt-averse financial stance. Future improvements in corporate governance and debt management are expected to be crucial for maintaining or enhancing its credit ratings.