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The Pakistan Credit Rating Agency Limited
Press Release

Date
27-Dec-18

Analyst
Muhammad Nadeem Sheikh
nadeem.sheikh@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Entity Ratings of EXIDE Pakistan Limited

Rating Type Entity
Current
(27-Dec-18)
Previous
(11-Jul-18)
Action Maintain Initial
Long Term A- A-
Short Term A2 A2
Outlook Negative Stable
Rating Watch - -

EXIDE Pakistan Limited (EXIDE) is a pioneer in the battery industry; it has a presence in Pakistan since 1968. Demand for batteries is generated through two segments (i) OEMs and (ii) replacement market. With a considerable improvement in the power sector, demand of UPS batteries is diminishing. Decreased demand coupled with entry of new players has intensified the competition. The overall industry has an oversupply situation and margins are under stress. Demand may positively benefit when CPEC related projects pick up. The big three players hold about ~75% of the market while the remaining is held by numerous smaller ones. Success is pivotal on maintaining market share. The sponsors have a good understanding of the business. The company’s profitability which had been healthy in the past, got hit recently due to slowing industry sales and eroding business margins. EXIDE’s leveraging is adequate and the company does not intend to raise long term debt. Debt servicing capacity is deteriorated on the backdrop of eroded margins.
The negative outlook captures the deteriorated business condition of the sector having negative impact on the players operating in this industry. The ratings are dependent on the revival of subdued business volumes and impacted profitability. Prolonged downturn amidst market oversupply can have a detrimental effect.

About the Entity
EXIDE Pakistan Limited was incorporated in Pakistan in 1953 as a private limited company in association with Chloride Group PLC of United Kingdom. EXIDE got listed on the Karachi Stock Exchange in 1982. It is considered as a pioneer and one of the three major players of battery industry in Pakistan.
EXIDE is majorly owned (75%) by the three brothers from Hashwani family. Mr. Altaf Hashwani is the Chariman of the Board. Mr. Arshad Shahzada is the Chief Executive Officer of the company. He has overall experience of ~53 years and has been associated with the company for ~32 years.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.