KARACHI: VIS Credit Rating Company Limited has upgraded the medium to long-term entity rating of Orient Electronics (Pvt.) Limited (OEL) from triple B Plus to single A minus while maintaining short-term rating at A two.
The medium to long-term rating of ‘A-’ denotes good credit quality coupled with adequate protection factors. Moreover, risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments. Liquidity factors and company fundamentals are considered sound. The previous rating action was announced on June 26, 2020, said release on Wednesday.
OEL is a reputed manufacturer of home appliances in Pakistan. Shareholding is vested with the sponsoring family who have over six decades of experience in the consumer electronics industry. The company has been able to maintain long-term relations with the vendors and dealers. Revision in rating takes into account growth in sales in the ongoing year with increase manifested in all major products led by higher volumetric sales and average selling prices.
Liquidity is considered adequate in terms of cash flow coverages. Leverage indicators have remained comfortable on the back of augmentation in core equity. The ratings also factor in continued sponsors support in the form of interest free loans.
OEL, Orient Colour Labs (OCL- Parent company) and Orient Electronic Appliances (Pvt.) Limited (OEAL – An associated company) has filed a joint application in the Court of Law for sanctioning scheme of Compromises, Arrangements and Reconstruction. The principal object of the scheme is to provide for the division of OEL by means of separation of the operations segment (all assets other than immoveable properties) as a going concern from OEL.