PACRA upgrades Bestway Cement’s rating‏

Karachi: 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 for eseescontracting 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% 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. Cognizant of this, Pakcem is setting up a Waste Heat Recovery Power Plant of 12MW with an estimated cost of PKR 1.4bln, planned to be operational by first quarter of 2017. The plant would meet around one-third of the company’s total electricity requirements and thus reduced power cost.

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