Lahore, March 08, 2016 (PPI-OT): PACRA has assigned a long term rating of “BBB+” (Triple B Plus) and short-term rating of “A2” (Single A Two) to MicroTech Industries (Private) Limited (MicroTech). The ratings denote a low expectation of credit risk.
MicroTech’s business model is based on technology solutions. The company has gradually established itself as a recognized energy meter manufacturer – digital and smart – and a local metering solutions provider. The company’s key strength lies in its indigenous Research and Development infrastructure and an able management team spearheading the company’s operations. The company’s tender-based revenues are exposed to concentration risk – single product and single buyer. However, currently favourable competitive position of the company, in high margin smart metering business, provides comfort.
Meanwhile, sizeable business potential [particularly for smart meters] in local market, also unveiled by lately initiated foreign funded government projects focused towards infrastructure reforms, dilutes business risk to some extent. The company’s financial risk profile is adequate. The company’s financial requirement emanate from its needs to fund its working capital (mainly receivables) and arranging requisite quantum of guarantees for soliciting business volumes, Current structure of bank limits reasonable support the company’s historic growth trend. However, participation in any new large projects expected to roll-out by the government over the medium-term, may require further capacities.
The ratings are dependent on the company’s ability to adapt to technological progression in its line of business to maintain its market position particularly in local industry. Any increase in competitive pressure may result in rationalization in business margins; thus requires proactive management. Meanwhile, strengthening in governance structure is needed to improve independent oversight of board.
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