VIS Credit Rating Company Reaffirms Entity Ratings to Archroma Pakistan Limited - Press Release issued by VIS Credit Rating Company Limited.

Karachi -- January 31, 2023 (PPI-OT)

Following is the text of press release issued by VIS Credit Rating Company Limited


VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Archroma Pakistan Limited ('ARPL' or 'the Company') at 'AA/A-1' (Double A /A-One) to. Long Term Rating of 'AA' reflects high credit quality, strong protection factors, and moderate risk but may vary slightly because of economic conditions. Short Term Rating of 'A-1' indicates high certainty of timely payment, excellent liquidity factors supported by good fundamental protection factors and minor risk factors. Outlook on the assigned ratings is 'Stable'.

Archroma Pakistan Limited was formed in 2013 from the textiles, paper and emulsions business of Clariant. Clariant itself was formed in 1995 as a spin off from Sandoz, a chemical and pharmaceutical company incorporated in Pakistan and listed on PSX in 1963. Since its inception, i.e. Sandoz, Clariant and now Archroma has been primarily engaged in the manufacture and sales of chemicals, dyestuffs, coating, adhesive and sealants for the textile, paper, construction, and home care industries. Archroma is a global, diversified provider of specialty chemicals operating in over 35 countries and with 26 production sites. Archroma Pakistan Limited is 75% owned by Archroma Textiles GmbH Switzerland. The Company has two production facilities located in Karachi and Jamshoro (Sindh) with a broad range of product portfolio. Overall corporate governance structure of the Company is considered sound.

Assigned ratings incorporates strong parent profile, leadership position in the specialty chemicals market and moderate business risk profile. With majority (~90%) of its offtake emanating from the Brand and Performance Textile (BPT) segment, the Company's revenue depicts significant sensitivity to changes in its downstream industry i.e. textile. Cognizant of this concentration, the Company's management is working towards diversification. On a YoY basis, we have not noted any change in proportion of revenue contribution from non-BPT segment. However, as per management as new projects commercialize, the diversification is expected to improve through the rating horizon.


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