Press Release

VIS Credit Rating Company Maintains Entity Ratings of Sunrays Textile Mills Limited

Karachi, June 08, 2021: VIS Credit Rating Company Limited (VIS) has maintained entity ratings of Sunrays Textile Mills Limited (SUTM) at ‘A-/A-1’ (Single A Minus/A-One). Long term entity rating of ‘A-’ reflects good credit quality, adequate protection factors. Risk factors may vary with possible changes in the economy. Short Term Rating of ‘A-1’ indicates high certainty of timely payment, liquidity factors are excellent and supported by good fundamental factors. Risk factors are minor. Outlook on the assigned ratings has been revised from ‘Rating Watch-Developing’ to ‘Stable’. The previous rating action was announced on April 22, 2020.

Revision in rating outlook take into account recovery in industry wide exports post ease in COVID-19 lockdown measures supporting overall business risk profile of the industry. Even though impact of COVID-19’s third wave remains elevated, we expect the order book for the industry to remain adequate in the ongoing year, easing our business risk concerns.

SUTM is a part of the Indus Group of Companies which is a sizeable player in the country’s textile business with an annual turnover of over $300m. Within textile sector, Indus Group has over five decades of experience and operates through five entities. The group is primarily engaged in the business of cotton ginning, yarn spinning, greige fabric manufacturing and home textiles (primarily towel business). Principal activities of SUTM include trade, manufacture and sale of yarn. The Company also operates ginning units and ice factories under leasing arrangements.

Assessment of financial risk profile depicts improving profitability profile, healthy cash flow coverages of outstanding borrowings and conservative financial policy. Topline of the company increased during FY20 on account of both higher volumetric sales and average selling prices and was further enhanced in 9MFY21 led by higher revenue emanating from the domestic market’s hosiery segment. Going forward, sales are expected to escalate on account of adequate orders in pipeline and projected increase in average selling prices (ASPs). Gross profitability profile of the company was impacted by higher raw material prices led by disrupted production cycle due to COVID-19, and inventory losses during FY20 but overall it was supported by lower finance costs. Moreover, during 9MFY21, gross and net margins of the company reflected an increase owing to higher ASPs and inventory gains and are projected to witness continued improvement going forward on the back of projected gradual increase in demand and average selling prices. Liquidity profile of the company is considered strong with healthy cash flows in relation to outstanding obligations. Liquidity profile of the company is further supported by reduced trade debts along with sizeable short term investments on the balance sheet. Capitalization indicators are supported by low leveraged capital structure and conservative financial policy. Given no such financing of capex plans through long term borrowings, and higher projected profitability, capitalization indicators of the company are expected to depict further improvement, going forward.

For further information on this rating announcement, please contact Ms. Asfia Aziz or the undersigned (Ext: 201) at (021) 35311861-66 or email at

Javed Callea

Applicable Rating Criteria: Industrial Corporates (April 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 2021 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

VIS Credit Rating Company Limited