The Pakistan Credit Rating Agency Limited
12-Dec-18
Analyst
Ayesha Qasim
ayesha.qasim@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
- Methodology | Corporate Ratings | Jun-18
- Methodology | Criteria | Rating Modifier | Jun-18
- Methodology | Correlation Between Long-Term And Short-Term Rating Scale | Jun-18
Related Research
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 Azhar Corporation (Pvt.) Limited
| Rating Type | Entity | |
|
Current (12-Dec-18 ) |
Previous (22-Jun-18 ) |
|
| Action | Maintain | Initial |
| Long Term | BBB+ | BBB+ |
| Short Term | A2 | A2 |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
Pakistan's personal and homecare product market has shown an annual growth rate of 2-3%. The industry not only fulfills the entire local demand but also has the potential to export its products. Within the homecare products, a rapid switch has been witnessed from soap/liquid to powder detergents. The market for soap bars posted an annual dip of 8-10%. However, the market for powder detergents posted an annual growth of 15-20%.
The ratings reflects Azhar Corporation (Pvt.) Limited's diversified revenue stream and strong presence in Soap and Vegetable Ghee/Edible Oil market.The Company is a market leader with an established brand - Gai Soap and thus generates most of its revenue from local sales, while some exports are made to Afghanistan. The Company is trying to maintain its market share by expanding geographically and have introduced new product (Powder detergent - Gai Power Wash) in the market. Being a new entrant in the branded Vegetable Ghee/Edible Oil market - Gai Banaspati, the Company’s Oil/ Ghee business is in a challenging phase; thus impacting the overall performance. Financial profile of the Company remains stable owing to moderately leveraged capital structure; consisting of short-term debt only, obtained to finance the working capital requirement. The Company's coverage ratios remain modest.
The ratings are dependent on the management's ability to prudently manage its market share, while maintaining business margins. Pressure on business volume and margins owing to the market conditions may negatively impact the ratings.
About
the Entity
Azhar Corporation (Pvt.) Limited was incorporated in 1979. The Company principally manufactures Personal and Homecare products at an installed capacity of 350 MT/day and 150 MT/day. These include laundry soap, toilet soap, detergent bar and detergent powder. Azhar Corporation (Pvt.) Limited also manufactures Vegetable Ghee and Cooking Oil at an installed capacity of 200MT/day.
By operating at a capacity of 85%, the Company exports around 5,000 Tons of soap per year to Afghanistan.
Azhar Corporation (Pvt.) Limited's ownership vests with Mr. Sh. Mohd. Munawwar's family (51%) and his brother, Mr. Azhar Iqbal (49%). Mr. Sh. Mohd. Munawwar has 16% stake in the Company. While his sons, Mr. Mazahar Munawwar and Mr. Hassan Munawwar holds 18% and 17% shares of Azhar Corporation, respectively. Hence, the sponsoring family holds 100% stake in the Company.
Azhar Corporation (Pvt.) Limited's Board is dominated by the Sponsoring family. The Board's Chairman and the Company's CEO, Mr. Mr. Sh. Mohd. Munawwar, is assisted by a team of professionals.