The Pakistan Credit Rating Agency Limited
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Bazah Tul Qamar

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PACRA Maintains Entity Ratings of Askari Cement Limited

Rating Type Entity
Action Maintain Maintain
Long Term A A
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

Askari Cement's ratings reflect its sustained position in the cement industry. The Company has two existing cement manufacturing units (Nizampur and Wah) - operating with combined capacity of 2.7mln tpa. Over the last few years, the company had been able to maintain growth trajectory trend in revenue. Economic activities have resumed despite continuing vicissitudes of COVID 19. Growth in local capacity utilization depicts the sector’s resilience to the impacts amid country wide lock down observed due to COVID-19 outbreak. This resulted in improved demand along with pricing implications supporting margins. Furthermore, curtailed policy rates and better cement prices giving the required supporting environment to flourish. The Company’s revenues witnessed an increase attributable to uptick in sales (end-Dec20: PKR 8.7bln, Jun20: PKR 13bln). During 1HFY21, margins improved slightly, reviving from Covid period. Therefore; the company managed to recoup previous losses and reported profits of ~PKR 669mln for half-yearly Dec20. The company has announced a capacity brown field expansion of 6,500 tons the cost of project (including WHR) is estimated to be ~ PKR 27bln, which is planned to be financed through debt(70% ) and equity (30%). The Company is in the process of merger with Fauji Cement, transaction is however yet to be materialized. The ratings take into account the fact that up taking of further loan will potentially impact the financial risk profile of the Company, while expected to remain manageable through positive outcomes of merger. The ratings further take comfort from strong financial strength of Fauji Foundation - third largest sponsoring group in the cement industry.
The ratings are dependent on current positioning of the company’s business and financial risk profile; strengthening of equity base is essential. Any significant increase in leveraging ratio will could potentially impact the ratings.

About the Entity
Askari Cement Limited (ACL) is an unlisted, public limited company incorporated in 1990. The Company is wholly owned subsidiary of Fauji Foundation and the production facilities are located in North region (Wah and Nizampur). Fauji Foundation has another cement company named ‘Fauji Cement Company Limited.
The overall control of the company vests in seven-member board of directors (BoD), including the CEO. The sponsor dominated board is chaired by Chairperson – Mr. Waqar A Malik who is also associated with several Fauji Foundation companies board. His professional experience spans over 30 years which includes managing and leading businesses in the petrochemicals, consumer and the life sciences industry. The CEO, Mr. Qamar Haris Manzoor has done Masters in Chemical Engineer from US and holds over 33 years of experience in plant and project management. He is assisted by well experienced team members.

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.