The Pakistan Credit Rating Agency Limited
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Kanwal Ejaz

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PACRA Maintains Entity Ratings of E-Vision Manufacturing Limited

Rating Type Entity
(24-Jun-21 )
(17-Jul-20 )
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 (r-PSF) industry. The Company has identified a niche in the textile industry by manufacturing fine white, black and green regenerated polyester staple fiber and polyester chips using post-consumed polyethylene terephthalate (PET) bottles. This market is relatively new and growing at a fast pace. Management represented that global environmental authorities are also promoting to use r-PSF as against virgin PSF because, manufacturing process of r-PSF consumes less energy and does not deplete natural energy resources. During CY20 revenues of the Company were depressed due to low capacity utilization and global supply chain disruption caused by outbreak of Covid-19. Textile industry as a whole now comprehended recovery and the Company was able to get benefit from higher product demand which is translated into better sales revenue during 1QCY21. Margins of the Company also showed improvements due to efficient raw material sourcing and by reducing expenditures. The Company’s financial risk profile remains at moderate level, borrowing mainly comprising of short term for working capital requirement, whereas growth in cash flows resulted into better coverages. To cater the high demand of r-PSF in future the Company is planning for capacity expansions by (a) addition of new 30TPD plant (b) BMR of existing plant. The Company intends to relay predominantly on internally generated cash flows and sponsor’s equity contribution without leveraging the capital structure.
The ratings are dependent on upheld sustainable revenues and margins. Meanwhile, maintaining a low leveraged capital structure and strong coverages remain critical. Going forward, better governance framework will be positive for the 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.