The Pakistan Credit Rating Agency Limited
22-Jun-18
Analyst
Ayesha Qasim
ayesha.qasim@pacra.com
+92-42-35869504
www.pacra.com
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Related Research
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PACRA Assigns Initial Entity Ratings to Azhar Corporation (Pvt.) Limited
| Rating Type | Entity | |
|
Current (22-Jun-18 ) |
||
| Action | Initial | |
| Long Term | BBB+ | |
| Short Term | A2 | |
| Outlook | Stable | |
| Rating Watch | - | |
The rating reflects ACPL’s association with an established brand name Gai Soap with the long history of operations. The Company is primarily engaged in manufacturing of Personal and Home care products. The Company head office and factory located in Faisalabad is operating at a capacity of 85%. The main portion of the Company’s sales consist of local sales, while some exports are made to Afghanistan. According to the recent market pressure especially on bar soaps, company is trying to maintain its market share by expanding geographically and introducing new products to the market. The company’s financial risk remains low mainly reflected from moderately leveraged capital structure – consist of mainly short-term borrowing related to working capital. The company does not plan to raise any long term debt. The Company’s Oil/ Ghee business is in challenging phase, with the exit of big chain of super store. The management is striving to supplement its sales with alternative buyers.
The ratings are dependent on the management's ability to prudently manage its system 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 (Azhar Corporation) is a private limited company, incorporated in 1979. The Company operates with the production capacity of 700 Metric tons per day. Azhar Corporation is almost equally held by Mr. Azhar Iqbal (49.39%) and his brother Mr. Sheikh Muhammad Munawwar. Mr. Sheikh Muhammad Munawwar, CEO of the Company holds 15.54%. The two sons of Mr. Muhammad Munawwar i) Mr. Mazhar Munawwar ii) Mr. Hassan Munawwar holds 18.25% and 16.82% respectively. Hence, the sponsor family holds 100% stake in the Company.
Azhar Corporation has four member board. All members of the board are from sponsor family. The CEO, Mr. Muhammad Munawwar, the CEO of the Company, thus attached to this business for more than 45 years. He also oversees the finance side and international relationship. The Management reporting structure is evolving further. A team of professionals assist the senior management.