Ratings of Security Papers reaffirmed

Karachi, July 23, 2012 (PPI-OT): JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Security Papers Ltd. (SPL) at ‘AAA/A-1+’ (Triple A/A-One Plus). Outlook on the medium to long term rating is ‘Stable’.

The assigned rating takes into account the unique positioning of SPL in its role as the sole bank note paper manufacturer in the country. The primary buyer of SPL’s products, Pakistan Security Printing Corporation (Pvt.) Ltd, is also its single largest shareholder, having a 40% stake in the company.

As prices of raw materials escalated in FY11 and FY12, production costs increased substantially. On account of this, margins came under pressure in FY11, though there has been improvement in FY12. Over the last two years, the company acquired external borrowings to finance the Balancing, Modernization and Replacement (BMR) of plant and machinery; aimed at improving the production processes. With no major capex planned in the near to medium term, debt levels are expected to decline, going forward. Debt servicing coverage remains adequate.

In July 2012, the company successfully initiated the commercial production of cheque book paper while the company is also optimistic about obtaining orders for production of passport paper in the on-going financial year. Going forward the company intends to focus on diversification of its product base and improving operational efficiency.

For more information, contact:
Mr. Javed Callea
JCR-VIS Credit Rating Company Limited
Tel: +9221 35311861 (10 lines) (Ext: 501)
Fax: +9221 35311872-3
E mail: javed.callea@jcrvis.com.pk