The Pakistan Credit Rating Agency Limited
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Sohail Ahmed Qureshi

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PACRA Assigns Initial Ratings to CCL Pharmaceuticals (Pvt.) Ltd

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

The ratings take comfort from CCL Pharmaceuticals Pvt. Ltd (herein referred as "CCL" or the "Company"), reputable profile in pharmaceutical segment of Pakistan with a legacy built over 50 years and operations in more than 22 countries worldwide. Product portfolio of the Company is divided into two major domains, Pharmaceuticals and Consumer Health Care. CCL’s top 5 products include major brands such as, Sita Met, Pulmonol, Maxflow, Paraxyl CR and Orinase Met, these contribute approx. 45% in total revenue. CCL has state of the art GMP compliant manufacturing facility which is able to produce dry powder, liquid orals, solid orals, liquid injectable, powder injectable. Major capital expenditure is underway to upgrade manufacturing facility for PICs compliant which is a higher drugs compliance certification thus CCL will become one of the few PICs compliant pharmaceutical companies in Pakistan. Sponsors have decades of experience in Pharmaceutical business with well-defined vision to capitalize growth trajectory. CCL is classified among country’s top 20 pharmaceuticals and recognized as one of the fastest growing Company. In FY 2020-21, CCL was the fastest growing Company amongst the top 25 Pharmaceuticals Companies. The company is taking cognizance of corporate governance structure and formulated various committees at board and management level. The Company is led by professional management which includes highly qualified professionals with vast & diversified experience at senior management level in pharmaceutical industry & multinational organizations. The oversight role is played by the sponsoring shareholders with collaboration of Independent advisors on the board of directors. The operations of the Company benefited with sound system of internal controls implemented across the organization. The assigned ratings of the Company take comfort from sticky demand of product and strong market share in Anti-Diabetic, Anti-Depressants and Expectorants. Financial profile of the Company is considered strong with healthy coverages, upright working capital management and comfortable cashflows. Capital structure is modestly leveraged to support BMR (PIC/S Compliant) and capacity expansions. Borrowings are comprising mix of short term and long term with significant portfolio of fixed rate instruments including Export Refinance Facilities, LTFF Facility availed for BMR and SBP Salaries and Wages Refinance Scheme. Going forward the Company will be benefited from (a) more formal group structure with incorporation of CCL Holdings (b) increase of its market share with new molecules and through brand acquisitions (c) exploring new export destinations after PIC/S compliance.
The ratings are dependent on upheld sustainable profits and market share while retaining sufficient cash flows and coverages. However, adherence to maintain its debt metrics at an adequate level is a prerequisite.

About the Entity
CCL Pharmaceuticals (Pvt.) Limited (the Company) was incorporated in Pakistan on April 28, 1985 under the Companies Ordinance, 1984 (now the Companies Act, 2017) as a private limited company and is principally engaged in the manufacturing and sale of all sorts of medicines, drugs and allied activities. The registered office of the Company is located at 65 - Quaid-e-Azam, Industrial Estate, Kot Lakhpat.
Current sponsoring family is second generation and the Company’s shareholding is divided equally among four family members. Mr. Kashif Sajjad Sheikh (25%), Mr. Asim Dilawar Sheikh (25%), Mr. Hassan Zubair Sheikh (25%) and Mr. Nadeem Bin Javaid Sheikh (25%). Mr. Kashif Sajjad Sheikh is the chairman of the board. Dr. Shahzad Khan is CEO of the Company, he possesses more than 25 years’ experience in medical research, business strategy and Marketing & Sales of Pharmaceuticals. He is associated with CCL form last 5 years.

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.