PACRA Maintains Entity Ratings of Pak Elektron Limited

Pak Elektron Limited (“PEL” or “the Company”) is a leading engineering corporation in Pakistan, recognized for its extensive range of household appliances and electrical equipment. The ratings underscore PEL’s diversified revenue streams and its well-established presence in both the Appliances and Power divisions. The Appliances division offers a comprehensive product portfolio, including refrigerators, deep freezers, air conditioners, microwave ovens, etc. Meanwhile, the Power division encompasses a versatile range of products such as transmission and distribution transformers, energy meters, and switchgears. Key drivers for the household appliances market include technological advancements, rapid urbanization, expansion in the housing sector, rising per capita income, improved living standards, and a growing demand for convenience and comfort in domestic tasks. On the other hand, the Power division’s performance is linked to investments in transmission and distribution networks, urban development, and ongoing construction activities. Previously, the local industry has faced numerous challenges due to adverse macroeconomic conditions. However, in FY25, the situation improved, driven by exchange rate stabilization, a gradual reduction in inflation and policy rates, and enhanced consumer sentiment. In line with these positive trends, PEL’s Appliances division reported a notable revenue growth of ~68% in CY24, primarily fueled by a ~53% increase in sales volumes as compared to CY23. The Power division also recorded revenue growth of ~13%, largely driven by price adjustments, although volumes declined slightly as compared to CY23. Despite intense competition in the household appliances market, PEL managed to modestly increase its market share in refrigerators, deep freezers, air conditioners, and microwave ovens. In the Power division, market share improved for power transformers only, while other segments experienced some dilution due to heightened local competition. In CY24, the Appliances division accounted for 53% of total sales, while the Power division contributed the remaining 47%. Overall, the Company’s revenue increased by 37% in CY24. However, gross and operating margins faced slight dilution due to increased costs at various levels. The Company’s financial risk profile reflects comfortable coverage ratios and cash flows, albeit with a stretched working capital cycle. The capital structure is leveraged, with borrowings mainly consisting of short-term debt to support working capital needs. Looking ahead, business prospects appear promising, based on the anticipated rise in volumes from the local market, and more so from the export market. Export is a new market initiative which will create additional topline as well as bottomline. At the same time, this will enhance overall business sustainability, given the generation of foreign currency.
The ratings are dependent upon sustained improvements in revenue, profitability, and market share, while ensuring sufficient cash flows and coverage ratios. Effective management of liquidity and financial risks remains critical for maintaining the ratings. Furthermore, alignment with shared financial projections will be essential.

About the Entity
PEL, incorporated in 1956, is a listed public limited Company. It is principally engaged in the manufacturing and sale of electrical capital goods and domestic appliances. Saigol Group owns shareholding in the Company (~51.0%) through family members. Other interests of the group include power, textile and real estate. Mr. Naseem Saigol is the Chairman of the 8 members Board. Saigol family has prominent presence on Board. Mr. Murad Saigol, CEO, monitors all the strategic and operational affairs of the Company. He is supported by an experienced management.