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The Pakistan Credit Rating Agency Limited
Press Release

Date
11-Jul-18

Analyst
Muhammad Obaid
muhammad.obaid@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 assigns Initial Entity Ratings to EXIDE Pakistan Limited

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

EXIDE Pakistan Limited (EXIDE) is a pioneer in the battery industry; has a presence in Pakistan since 1968. The ratings take comfort from demand of batteries emanating from UPS market in addition to transport and personal vehicles and others. The competition has intensified due to improving power supply and entry of new players in the market.The overall industry has an oversupply and margins are under stress. Demand has seen a downward trend lately but may positively benefit if power demand overtakes the supply, especially 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 has been healthy in the past, got hit recently due to slowing industry sales and eroding business margins. EXIDE’s leveraging is good and the company doesn’t want to raise long term debt. Improving working capital management and strengthening debt servicing capacity through improving cash position is pivotal for the ratings.
The ratings are dependent on sustaining a steady revenue stream with profitable operations. Any prolonged downturn in subdued business volume 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 ultimately got listed on the Karachi Stock Exchange in 1982. EXIDE is considered a pioneer and one of the three major players of battery industry in Pakistan. EXIDE is majority owned (75%) by the three brothers from Hashwani family. The eldest, Mr. Arif Hashwani is the Chariman of the Board and his family, i.e. wife and daughter together own 42% stake. His wife, Ms Sana Arif Hashwani, also owns and runs a popular fabric business, Sana Safinas.

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.