Press Release

VIS Maintains Entity Ratings of Artistic Denim Mills Limited

Karachi, November 18, 2020: VIS Credit Rating Company Limited (VIS) has maintained the entity ratings of Artistic Denim Mills Limited (ADML) at ‘A-/A-1’ (Single A Plus/A-One). The long-term rating of ‘A-’ signifies good credit quality and adequate protection factors; risk factors may vary with possible changes in the economy. The short-term rating of ‘A-1’ signifies high certainty of timely payment; liquidity factors are excellent and supported by good fundamental protection factors while risk factors are minor. The outlook on the ratings has been revised to ‘Stable’. Previous rating action was announced on April 24, 2020.

ADML operates as a vertically integrated denim fabric and garment manufacturer. The company’s revenues are largely export centered. The ratings incorporate the business risk profile of the denim sector, which is driven by the global demand and pricing dynamics. Assessment of financial risk profile incorporates the company’s strong capitalization as reflected by a moderately leveraged capital structure and sound liquidity indicators, evident from healthy cash flows in relation to outstanding obligations.

The revision in rating outlook reflects improvement in performance of ADML Q1’FY21, as reflected by 28% growth in topline vis-à-vis SPLY. Given reduction in benchmark rates, the financing cost for the company has also reduced, reflecting positively on the bottomline. Even though concerns of a 2nd wave of Covid-19 remain elevated, we expect the order book for the industry to remain strong in the ongoing year, easing our business risk concerns. The assigned ratings remain dependent on maintenance of liquidity & capitalization metrics in line with the threshold.

For further information on this rating announcement, please contact the undersigned (Ext: 201) at 021-35311861-71 or fax to 021-35311872-3.

Javed Callea

Applicable Rating Criteria: Industrial Corporates (May 2019)

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2020 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

VIS Credit Rating Company Limited