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The Pakistan Credit Rating Agency Limited
Press Release

Date
21-Aug-20

Analyst
Sana Shameen
sana.shameen@pacra.com
+92-42-35869504
www.pacra.com

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PACRA Maintains Entity Ratings of Awan Trading Company (Pvt.) Limited| Rating Watch

Rating Type Entity
Current
(21-Aug-20)
Previous
(22-Aug-19)
Action Maintain Maintain
Long Term BBB+ BBB+
Short Term A2 A2
Outlook Stable Stable
Rating Watch YES -

The ratings reflect adequate profile of Awan Trading Company characterized by mediocre market share in imported coal, especially retail market. The Company imports majority of its raw material, where currency fluctuations and pricing risk effect margins. The management intends to pass on the impact onto customers, though demand sensitivity is a consideration. 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. . Over the last few years, the company has improved its business and financial profile; however, amidst the COVID-19 outbreak, business profile is facing challenge in terms of low demand resulting into a decline in volume metric growth, margins and profits. In this respect, the recent favorable decision about the taxation regime would support the company in coming. 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 utilization level as reflective of weak business performance remained moderate.
Going forward, management’s attention on sustainable customer base in addition to improving sales and margins is imperative. Any prolonged deterioration in revenues and/or coverages will impact the ratings. The rating watch captures these imperatives and the company’s resolve to steer through these would settle the watch in the foreseeable future.

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. Govind Ram. Mr. Kamlesh Kumar and Mr. Govind Ram holds executive position on board. Mr. Aslam Awan-company’s ex CEO who was associated with the company since its inception has passed away and Mr. Govind Ram is appointed as the new CEO of 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.