PACRA has upgraded the long-term and short-term entity ratings of Bestway Cement Limited to 'AA-' (Double A minus) and 'A1+' (A one plus), and maintained "A-" (Single A minus) and short-term rating of "A2" (A two) to Pakcem Limited respectively.
The ratings take note of Bestway Cement's strong business profile emanating from its robust market share, increasing local dispatches, efficient operational framework resulting in sound EBITDA margins, and healthy profitability. PACRA ratings for Pakcem denote a very strong capacity of timely payment of financial commitments. In line with the industry, Bestway foresees contracting export volumes. However, successful acquisition of Pakcem Limited (previously known as Lafarge Pakistan) has fortified Bestway's market position, making it the largest player having 18 percent of the country's cement capacity. Going forward, the management's focus is to capitalise on the potential synergic benefits of large size to improve margins, particularly at newly acquired Pakcem. Post-acquisition, focus will be on cultural harmonisation, and management of operational structure including team building.
PACRA's rating of Pakcem reflects adequate business profile supplemented by healthy local demand. Key focus is to improve margins mainly through cost efficiencies. Cognisant of this, Pakcem is setting up a Waste Heat Recovery Power Plant of 12MW with an estimated cost of Rs 1.4 billion, planned to be operational by first quarter of 2017.-PR