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The Pakistan Credit Rating Agency Limited

Date
29-Jan-2018
Analysts
Amara Gondal
amara.gondal@pacra.com

Muhammad Hassan
muhammad.hassan@pacra.com

+92-42-35869504
www.pacra.com
Applicable Criteria

  • Methodology | Corporate Rating Methodology (Jul 17) [View]
  • Methodology | Correlation between long-term and short-term rating scale (Jun 17) [View]
  • Methodology | Criteria Modifiers (Jun 17) [View]

Related Research

  • Sector Study | Relief Industry (Jan 18) [View]
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PACRA Assigns Initial Entity Ratings to H. Sheikh Noor-ud-Din & Sons (Pvt.) Limited
 Rating Type Entity
Current
(29-Jan-2018)
 Action. Initial
 Long Term A-
 Short Term A2
 Outlook Stable
 Rating Watch -

H. Sheikh Noor Ud Din & Sons (HSNDS), manufacturing arm of NRS International, is primarily engaged in manufacture of relief items and health items for international donor agencies. The ratings incorporate company’s long term association with international donor agencies such as UNHCR, UNESCO, Red Cross, and others. The company manufactures Long Lasting Insecticidal Nets (LLIN) under brand name DawaPlus®. Approved by World health Organization, it is the second most used LLIN with over 35% market share in the world. LLIN represents over 60% share of revenues of the company. The company's long term contracts along with strong margins provide comfort to sustainable healthy profitability. To cater the volatile needs of the relief industry, HSNDS has to maintain higher inventory levels which in turn give rise to higher capital needs. In FY17, increased working capital needs caused the short term borrowings to rise, impacting overall financial profile of the company. However, this remains strong.
Prudent management of working capital, while keeping efficient inventory levels to manage relief industry needs will be important. Meanwhile, strengthening of governance framework and financial transparency for better oversight of strategic affairs is considered essential. Adherence to agreed upon financial matrices (Short term borrowing to Net working capital <70%, cash debt coverages of above 2.5x) will remain critical.
About the Entity
H. Sheikh Noor Ud Din & Sons (HSNDS) was incorporated in 1979 as a private limited company. The company is owned by four brothers having equal shareholding. Located at Lahore, it manufactures Blankets, Tents, Plastic Items, Solar Lights and Long Lasting Insecticidal Nets.

Overall control vests with 4 members BoD as all four brothers are on the board. Farhan Sarwar elder of the four brothers, is the Chief Executive officer of the company. He has over two decades of experience in relief industry. Mr. Farhan is assisted by his brothers and an experienced management team.
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.
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