PACRA Assigns Initial Entity Ratings to Welcon Chemicals (Private) Limited
Lahore, February 25, 2019 (PPI-OT): Welcon Chemicals (Pvt.) Limited operates in three segments: i) pesticides ii) seeds and iii) fertilizer mainly through its dealer and distribution network. The Company is one of the pioneer groups entered in this segment back in 1990’s. The Company has reported adequate turnover, with the contribution of each segment, while pesticide remains predominant segment in terms of revenue. Profitability of the company is slight.
Welcon Chemicals expanded its operations by entering into different businesses in agriculture industry and achieving operational efficiency. The company’s plant is located at Jhanian – Khanewal; near the Company’s home market (Multan) which benefits the cost structure. The governance structure of the company has room for improvement for more effective business oversight. To engage customers and to enhance foot print in the market, group’s R and D performs researches /tests frequently and engage customers by arranging “Bhaitak” in far flung areas to address farmer’s real problems.
The Company meets its working capital requirements through a mix of internal cashflows and short term borrowings. However, the financial risk remains good on account of low long term finance and adequate coverages. Going forward, the improvement in bottom-line and cash flows, standardization of the governance structure and financial transparency is vital. The ratings also take into account the sponsor strength as AllahDin group has interests in diversified segments of agriculture.
The ratings are dependent on improvement in business and financial profile of the company. Any deterioration to topline, margins and/or cash flows remains critical to the ratings. The company’s sustained business performance in current stretched economic scenario – remains vital for ratings.
For more information, contact:
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
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