PACRA Maintains Entity Ratings of Pioneer Cement Limited

The ratings reflect Pioneer Cement’s healthy business profile supplemented by strong EBITDA margins and improved revenue stream. Pioneer Cement's sales are majorly driven by local market fundamental - a factor of plant location whereby local sales are feasible versus exports. The factors like i) sales focus on nearby geographies - thereby reducing distribution expense and ii) achieving higher capacity utilization level has benefited the Company's EBITDA. The upcoming energy projects (12MW WHRPP and 24MW coal power plant) are likely to assist bottom-line in future through significant power cost savings. The financial risk profile of the company is strong on account of low leveraged capital structure along with healthy coverages and is expected to remain low in medium term. The ratings draw comfort from sponsor's financial strength.

The ratings are dependent on the management's ability to (i) uphold margins, and (ii) optimal utilization of existing lines. Any significant deterioration in the sector’s outlook particularly any unfavorable change in demand and expansion matrix, thereby exerting pressure on prices and margins, may negatively impact the ratings.

About the Entity
Pioneer Cement is an affiliate of Mega group. The group owns 47% stake in Pioneer Cement through Vision Holding Middle East Limited. The group, led by Mr. Habibullah Khan, has key interest in shipping and logistics business, in addition to exposure in real estate, ports (terminal), food and energy sectors. Pioneer Cement is listed on PSX and has a well spread shareholding pattern. The overall control of the Company vests in eight member board of directors including the MD/CEO. Four non-executive directors represent Mega group, three are independent members, while remaining one is executive director. The MD, Syed Mazhar Iqbal, is Chartered Accountant and carries over three decades of diverse experience. He is supported by an experienced management team.