Final PR
The Pakistan Credit Rating Agency Limited

Saira Rizwan

Applicable Criteria

  • Rating Modifiers | Outlook and Rating Watch (Jun 16) [View]
  • Correlation between Long-term and Short-term rating (Jun 16) [View]

Related Research

  • Sector Study | Cement (Sep 16) [View]
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PACRA Upgrades Entity Ratings of Maple Leaf Cement Factory
 Rating Type Entity
 Action Upgrade
 Long Term A+
 Short Term A1
 Outlook Stable
 Rating Watch -

The ratings reflect Maple Leaf’s strong business profile characterized by recognized brand, sizable market share, and robust profitability. Efficient supply chain management coupled with lower energy costs resulted in improvement in EBITDA margins in recent years. Moreover, favourable sector dynamics, on the back of rising local infrastructure activity, has continued to support the volumetric cement dispatches. Hence, capacity utilization, while showing an increase [FY16: 99%, FY15: 89%], has reached optimal level for existing capacity. The entity’s financial risk profile has witnessed notable improvement. The company has reduced its leveraging through early retirement of major debt, thereby enhancing risk absorption capacity. In anticipation of positive demand outlook, Maple Leaf has announced capacity expansion of 2.1mln tpa. The project, with an estimated cost of PKR 20bln is to be partially debt financed; expected CoD: Jan19. At the same time, progress on coal power plant (40MW) is underway and expected to come online as planned in Sep17. Going forward, the financial risk is expected to remain fairly low on the back of healthy internal cash generation. The ratings recognize the company's seasoned management team, having sound technical stature and quality support infrastructure.

The ratings are dependent on the management's ability to sustain sales volumes along with its healthy business margins. Any significant deterioration in the company's cashflows, due to demand fluctuation or pricing pressure, impacting financial risk would be rating negative.

About the Entity
Maple Leaf Cement Factory Limited – a Kohinoor Maple Leaf Group (KMLG) Company – established in 1956 and is listed on Pakistan Stock exchange. The group, through Kohinoor Textile Mills, owns majority stake (~55%) in the company, while the rest is widely spread among general public and Financial Institutions. KMLG mainly maintains interests in cement and textile sectors.

Overall control of the company vests in eight-member board. BoD is dominated by Saigol family, with five members, including the CEO. Mr. Sayeed Saigol, the CEO, is ably spearheading the company. He is supported by a team of professionals with relevant experience in the cement industry.
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.