The Pakistan Credit Rating Agency Limited
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Kanwal Ejaz

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PACRA Assigns Initial Entity Ratings to Malik MIJ Chunxing Resources Recycling Co. Limited

Rating Type Entity
Action Initial
Long Term BBB
Short Term A2
Outlook Stable
Rating Watch -

Malik MIJ Chunxing Resources Recycling Co. Limited (MMC or 'the Company') ratings reflect reputable business profile and strong presence in the field of recycling Used Lead Acid Batteries (ULAB). The Company is principally engaged in the business of recycling & disposal of used lead acid battery, lead plates, lead paste and powder as well as manufacturing and sale of bullion and refined lead. Local recycled lead market is fragmented and the Company faces competition with large unorganized segment. The Joint Venture Company has business history, and rating takes comfort from business profiles of the sponsors. One of the sponsoring company ‘Jiangsu New Chunxing Resource Recycling Co., Ltd’ has an experience of 3 decades in producing and refining secondary lead and it comes in the umbrella of Jiangsu Chunxing Alloy Group Co., Ltd, a company with over 40 years history of processing ULAB (Used Lead Acid Battery). The other sponsor is MIJ International with a decade experience, is a Dubai based company and a global metal merchant focusing in trading, processing and production of ferrous and non-ferrous metals. The Company expect growth in demand of refined recycle lead and has appropriate long term plans to enhance the production capacity accordingly. The board of the company is divided among the experienced sponsors who has diversified portfolios in the same industry. The Company is benefitting from adequate sound systems of internal controls as these are also monitored by the foreign sponsoring companies separately. Financial risk profile of the Company is considered adequate, with comfortable coverages, while cashflows are on moderate levels. Capital structure is leveraged ~ 75% with modest equity and higher borrowings which are comprising of long term and short term. The Company has also borrowed in foreign currency thus exposed to foreign exchange risks. Going forward Company is expecting to increase its capacity utilization and to increase export sales globally. The Company follows consistent debt policy, which is likely to continue in future as well also depicted in future financial projections.
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
Malik MIJ Chunxing Resources Recycling Co. Limited (MMC or 'the Company') is a public un-listed company. The registered office of the Company is in Lahore, and its plant is located at Faisalabad Industrial City. The Company is jointly ventured by Jiangsu New Chunxing Resource Recycling Co., MIJ International and Mr. Babar Waheed Malik. Jiangsu New Chunxing Resource Recycling Co., having 45.82% of share is incorporated outside Pakistan. MIJ International also incorporated outside Pakistan and has 18.67% shareholding. Remaining 35.5% shareholding is divided equally among Mr. Babar Waheed Malik (CEO) and Mr. Saeed Rafiq. Mr. Babar Waheed Malik is a seasoned business professional having extensive entrepreneurial experience in both UAE and Pakistan.

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.