The Pakistan Credit Rating Agency Limited
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Faizan Arif

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PACRA Assigns Initial Entity Ratings to Awan Trading Company (Pvt.) Limited

Rating Type Entity
Action Initial
Long Term BBB+
Short Term A2
Outlook Stable
Rating Watch -

The ratings reflect adequate profile of Awan Trading Company characterized by sizeable market share in imported coal, especially retail market. Over the last few years, the company has improved its business and financial profile. The performance of the company has improved on account of sustained profitability and improving margins. The company has arrangements regarding supply of coal with various suppliers globally. Awan Trading Company follows strategy of keeping some inventory in stock which is stored in rented/custom bonded warehouses. The business profile has shown improvement due to growth in topline and profits. The Awan Group caters to the coal demand of the corporates through another entity as well as having profitable operations. The financial risk profile is adequate. The company has sizable lines (funded and un-funded) available from different banks to cater to supplier demand though utilization level is still high compared to turnover. Going forward, management’s attention on sustainable customer base is imperative. The ratings are dependent on the company’s ability to maintain its market position.
Proactive management of business affairs, thus sustaining margins and coverages is important. Meanwhile, strengthening in governance structure is needed to improve financial transparency and oversight.

About the Entity
Awan Trading Company (Pvt.) Limited was established in October 1992. However, it remained dormant for several years till 2002. The company is engaged in import and trading of coal. The overall control of the company vests in four member board of directors (BoD) including the Chief Executive – Mr. Aslam Awan. Mr. Kamlesh Kumar and Mr. Govind Ram hold executive position on board. Mr. Aslam Awan, the CEO, is associated with the company since its inception and is accompanied by management having long association with the company.

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.