The Pakistan Credit Rating Agency Limited
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Muhammad Fahad Iqbal

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PACRA Maintains Entity Ratings of E-Vision Manufacturing Limited, Assigns 'Rating Watch'

Rating Type Entity
Action Maintain Maintain
Long Term BBB BBB
Short Term A2 A2
Outlook Stable Stable
Rating Watch Yes -

The ratings reflect the adequate business profile of E-Vision Manufacturing Limited and its established position in the regenerated polyester staple fiber industry. The Company has identified a niche in the textile industry by manufacturing fine white, black and green regenerated polyester staple fiber using post-consumed polyethylene terephthalate (PET) bottles. The Company’s topline, already small in size, has displayed declining trend attributable to withdrawal of zero rated tax policy. Margins have remained volatile owing to fluctuations in global oil prices, a key factor impacting product price. Impact of new entrants and seasonal constraints that limit availability of raw material, pose a challenge to the Company’s working capital management and optimal capacity utilization. Margins have recently shown improvement on the back of better procurement of raw material through imports and local market. The Company posted modest profitability and the trend has remained volatile as margins fluctuate. The Company’s financial risk profile remains strong with no long-term borrowings. This is supported by improving cashflows and strong coverages as quantum of borrowings remains small. The Company’s overall governance structure and financial transparency need improvement.
The Rating Watch signifies the prevailing uncertainty due to the outbreak of COVID-19 pandemic. This has impacted the entire textile chain as demand contracted due to shutdown in domestic and global markets and tough economic conditions. Recent SBP measures will provide some respite in this regard. The Company’s production facilities have been shut down but restarted production with easing in lockdown though demand remaines subdued. PACRA is closely monitoring the situation and will take rating action accordingly.
The ratings are dependent on sustaining operations and improving topline. Meanwhile, maintaining a low leveraged capital structure and strong coverages remain critical. Going forward, better governance framework will be positive for the ratings. Prolonged downturn in business conditions leading to lower revenues and margins due to Covid-19 outbreak will adversely impact ratings.

About the Entity
E-Vision Manufacturing Limited is a public, unlisted entity incorporated in 2013. The Company is engaged in the manufacturing and regeneration of polyester staple fiber with a gross production capacity of 60 tons per day. The Company’s major shareholding (~60%) is held through an offshore investment Company, Marylebone Management Limited, incorporated in the British Virgin Islands and owned wholly by Mr. Salman Ganny. Remaining shareholding (~40%) rests with Mr. Abdul Ghaffar (CEO).

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.