PACRA maintains the entity rating of KSB Pumps Company Limited

The ratings reflect leading position of KSB Pumps Company Limited ("KSB Pumps" or "the Company") as a premier manufacturer of pumps, valves and related services in Pakistan. Ratings incorporate KSB Pumps’ association with KSB SE & Co. KGaA, Germany (KSB Germany), which is one of the top 5 pump manufactures of the world. The Company has a state-of-the-art manufacturing facility certified by KSB Germany as MBK – Made by KSB . This is supplemented by robust systems and controls with access to KSB Germany for licensing and technical knowledge. Resultantly, the Company enjoys competitive advantage in domestic market as well as for exporting to other companies across the world including group companies. The Company has substantial market share in the pump industry. The Company’s revenues are mainly driven through public sector and private sector projects, although public sector proportion has decreased in recent years. Private sector industrial pumps and exports made up a significant part of revenues as the Company increased the exports to its group companies by leveraging its MBK certification and strong expertise. The Company takes the advantage of private and foreign funded projects which ease the pressure on receivables of the Company. KSB Pumps margins have taken a hit at the gross level due to increase in raw material prices as less than ~30% of raw material is imported keeping the company susceptible to currency risk. Higher exports will mitigate this to a large extent. KSB Pumps has an adequate financial profile characterized by moderately leveraged capital structure. The working capital of the Company is stretched due to long overdue receivables, mainly from the government. Receipt of cash inflows from one of the company’s projects primarily in first quarter of 2022 will provide relief to cashflows and, in turn, coverages. Company's association with KSB Group is considered positive. Ratings also take comfort from strong group support, technically and financially, and from its eligibility, under KSB group guidelines, to obtain intercompany loans and utilize umbrella credit facilities created by the parent company. However, during its entire history, the company never resorted to borrowing from Germany.
The ratings are dependent on the Company's ability to improve its core margins and profitability through execution of better margin projects. The company is pursuing a legal case, of which the outcome is not yet decided - hence the watch. Prudent working capital management, maintaining strong coverages with improved capacity utilization will increase cost optimization, hence imperative for the ratings going forward.

About the Entity
KSB Pumps is a public limited company, incorporated in July 1959 and got listed in 1971 on Pakistan Stock Exchange. KSB Pumps is a subsidiary of KSB SE & Co. KGaA, Germany with ~58.89% of the shareholding. KSB SE & Co. KGaA, Germany is a leading international supplier of pumps, valves and related systems for the Industrial applications. The group has an international presence in almost 120 countries. NIT is the second largest shareholder with 8.57% stake. Rest of the shareholding is divided among Corporates, Financial Institutions and General public. KSB Pumps manufacturing facility is located at Hassanabadal. The board comprises 8 members and is chaired by Dr. Sven Baumgarten. Mr. Imran Ghani, a mechanical engineer by profession and ex-CEO of MAN Energy Solutions has been appointed as CEO of company in place of Mr. Mohammad Masud Akhtar whereas Miss Faryal Zafar, a Cost & Management Accountant has been appointed as the Chief Financial Officer.