PACRA Maintains Entity Ratings of BBJ Pipe Industries Limited

Lahore, November 11, 2019 (PPI-OT): BBJ Pipes Industries Limited, a family operated business, is engaged in steel and polyethylene pipes industry. The company has been catering to the demand of government/ corporate projects since last many years. The ratings reflect an adequate market presence of the company in a highly fragmented industry. Over the last few years, the company’s business risk profile has strengthened on account of better volumetric sales.

Furthermore, the company has expanded its production capacity in last years which may bode well in the future. Steel pipe industry has some vital players operating in the market yet BBJ has earned a good name in its respective niche. BBJ Pipes has completed the process of establishing its subsidiary – BBJ Steels which is wholly owned subsidiary; the company was legally bind to follow this under S.R.O 565 (I). During FY19, topline witnessed decline attributable to cessation of CRC sales.

However, CRC sales are expected to pick up in near future under BBJ Steels. BBJ Pipes’ margins remained intact even though challenges remained on demand front. Volumes were largely maintained however working capital requirements enhanced which were largely catered by sponsor’s injection of funds. The financial risk revolves around higher short-term borrowings to support the working capital – inherent need of the business model followed by the company. The ratings also take into account strong equity base (FY19: PKR 2.4bln; FY18: PKR 2.4bln) – providing intrinsic risk absorption capacity. Going forward, the Company’s debt levels are expected to remain range-bound as no long-term financing is planned in foreseeable future.

The ratings are dependent upon the company’s ability to sustain and improve its business profile in the wake of challenges in current diluted economic scenario. Herein, effective and prudent management of financial risk indicators remain important.

For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com

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