April 21, 2020 (PPI-OT)

Following is the text of press release issued by VIS Credit Rating Company Limited

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VIS Credit Rating Company Ltd. (VIS), while maintaining the entity ratings of Hi-Tech Lubricants (HTL) at 'A/A-2' (Single A/A-Two), has placed the same on 'Rating Watch - Negative' Status. 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 September 12, 2019.

With the prevailing uncertainty due to coronavirus outbreak, prolonged lockdown, and overall contraction in demand, it is expected that sales volumes and cash flows of lubricant and oil marketing players will be significantly impacted. Status of the assigned rating is therefore uncertain, as an event of deviation from expected trend has occurred; additional information will be necessary to take any further rating action, warranting a 'Rating Watch Status'.

Given the demand compression emerging from the continued lockdown situation and low quantum of cash flow from operations, ratings are being placed on 'Negative' outlook. Comfort is drawn from HTL's low leveraged capital structure and absence of long-term debt on balance sheet which along with recent decline in interest rate is expected to reduce financial charges. Ratings remain dependent on maintaining market position, improving cash flow profile while maintaining low leveraged capital structure. VIS will closely monitor and will accordingly take action to resolve the outlook status.

HTL is the fourth largest player in the country's lubricant industry and sells almost all of its lubricants under the brand name 'ZIC'. The Company has also diversified in the oil marketing business with 11 operational HTL Fuel Stations and target of 20 in Punjab by 2020. OGRA has also granted permission to HTL to proceed with applying NOCs for opening of 35 HTL Fuel Stations with retail sales only expected to commence with completion of requisite storage infrastructure.

For more information, contact:Director Compliance and Rating Analytics,VIS Credit Rating Company LimitedVIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,Phase VII, DHA, Karachi, PakistanTel: +92-21-35311861-72Fax: +92-21-35311873Email: bilal@jcrvis.com.pkWebsite: https://www.vis.com.pk/

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© Pakistan Press International, source Asianet-Pakistan