VIS Revises Entity Ratings of Omar Jibran Engineering Industries Limited - Press Release issued by VIS Credit Rating Company Limited.

Karachi -- November 17, 2022 (PPI-OT)

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

Quote

VIS Credit Rating Company Limited (VIS) has maintained entity ratings of Omar Jibran Engineering Industries Limited (OJEIL) at 'A-/A-2' (Single A Minus/A-Two). Outlook on the assigned ratings has been revised from 'Stable' to 'Negative' status. Long-term entity rating of 'A-' reflects good credit quality, adequate protection factors. Risk factors may vary with possible changes in the economy. Short Term Rating of 'A-2' indicates good certainty of timely payment, liquidity factors and Company fundamental factors are sound. Previous rating action was announced on September 08, 2021.

Revision in rating outlook captures significant demand slowdown in the automobile industry in view of the weak economic fundamentals of the country, high benchmark rates, political uncertainty, inflationary pressures, floods in the country and the restrictions on quantity of imports of CKD kits imposed by State Bank of Pakistan to conserve the dwindling foreign reserves of the country. Moreover, cyclicality in sales due to slow down in GDP growth remains a key business risk factor.

Ratings continue to gain support from the Company's established position as a single source supplier of several critical auto parts to leading automobile and motorcycle manufacturers including Indus Motor Company (IMC), Honda Atlas Cars Limited (HAC) and Atlas Honda Limited (AHL - manufacturers of Honda brand motorcycles). OJEIL's overall financial performance for FY22 reflects higher revenue base, downward trend in margins and sufficient liquidity and leverage indicators of the Company.

Revenue base increment in the past two outgoing years was a result of both volumes and average selling prices. With assembly...

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