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The Pakistan Credit Rating Agency Limited
Press Release

Date
16-Jul-21

Analyst
Muhammad Mubashir Nazir
mubashir.nazir@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Entity Ratings of Jamal Pipes Industries (Pvt.) Limited

Rating Type Entity
Current
(16-Jul-21)
Previous
(17-Jul-20)
Action Maintain Maintain
Long Term BBB BBB
Short Term A2 A2
Outlook Stable Stable
Rating Watch - -

Jamal Pipes Industries (Pvt.) Limited, a family operated business, is engaged in manufacturing of pipes and allied products since four decades. The Company's product slate includes black line pipes, galvanized line pipes, variety of poles (octaconical poles, tubular poles and street light poles) and Guardrails. Around 47% is contribution from poles whilst from remaining 53% arises from pipes and guardrails. Diversification in product slate is considered positive while further strengthening of revenue from each products would reduce concentration and add cushion to business risk profile. The company has been catering to the demand of corporate projects since last many years and enjoys association with corporate clients. The ratings reflect an adequate market presence of the company in a highly fragmented industry. Over the last few years, the company's business risk profile has strengthened on account of better volumetric sales. During FY21, company’s net sales recorded around PKR 2.4bln where net profitability stood at PKR 135mln. Margins and coverage witnessed improvement attributable to low policy rates and lessor short term borrowings, profitability for FY21; stays in good range. The management is eying to improve capacity utilization by improving customer base for upcoming years. The financial risk revolves around higher short-term borrowings to support the working capital - inherent need of the business model followed by the company. The Company has an explicit policy of not raising any long term debt. Going forward, the Company’s debt levels are expected to remain range bound. The ratings incorporate four decades long association of sponsor family with the same industry.
The ratings are dependent upon the company’s ability to sustain its business profile, diversify customer base with better capacity utilization. Herein, effective and prudent management of financial risk indicators remain important.

About the Entity
Jamal Pipes Industries (Pvt.) Limited was incorporated in 1981. It is engaged in manufacturing of pipes, tubes, tubular poles and guardrails which are used in different government and private projects. The company is wholly owned by the sponsors family with equal shareholdings by Mr. Mian Farooq Ahmed and Mr. Mian Shakeel Ahmed and their families. The overall control of Company vests with two members' board of directors. Mr. Farooq Ahmed - the Chief Executive and Mr. Shakeel Ahmed - Executive Director are equipped with necessary technical skills to manage and oversee the business.

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.