Press Release

VIS Assigns Initial Ratings to Artistic Garment Industries (AGI Denim) (Private) Limited

Karachi, July 20, 2022: VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘A/A-2’ (Single A/A-Two) to Artistic Garments Industries (AGI Denim) (Private) Limited (AGIDPL). Long-term rating of ‘A’ signifies good credit quality with adequate protection factors. Risk may vary slightly from time to time because of economic conditions. The short-term rating of ‘A-2’ denotes good certainty of timely payments coupled with sound liquidity and company fundamentals. Outlook on the assigned ratings is ‘Stable’.

AGIDPL is a vertically integrated company that deals in manufacture and sales of denim fabric, yarn and all kinds of ready-made garments, dresses and clothes. Product-wise mix depicts concentration in sales of denim pants; other products include denim shorts, jackets, skirts, shirts and blouses. Formerly, the company was known as Artistic Fabric and Garment Industries (Pvt.) Limited and de-merged in December’2019 into two entities- Artistic Garments Industries (AGI Denim) (Private) Limited and Artistic Fabric Mills (Private) Limited.

Business profile is supported by recovery in industry wide exports post ease in COVID-19 lockdown measures. The ratings also take into account regional & counterparty concentration inherent in AGIDPL’s revenue base. Ratings also incorporate the Company’s satisfactory operating track record. Sound internal control and IT framework; however room for improvement exists in governance structure given private limited status of the company.

Assessment of financial risk profile reflects timeline improvement in revenue base and profitability profile. Growth in topline during FY21 was attributable to higher volumetric growth, rupee devaluation and ease in global macroeconomic conditions. Going forward, sales are expected to escalate on account of significant orders in hand in lieu of growing demand. Profitability profile of the company is supported by improving margins on a timeline basis on account of better average selling prices, and lower power costs due to installation of solar power panels at manufacturing units. Going forward, profitability profile is expected to improve in view of reaping benefits of backward integration and capacity expansion in the weaving segment. Ratings remain dependent on maintaining projected profitability levels amidst rising interest rates environment. Despite improvement in overall profitability in FY21, cash flow coverage of outstanding obligations have declined due to prominent debt drawdown in the outgoing year. Improvement in liquidity coverages through enhanced projected profitability is considered important from ratings perspective. Elevated capitalization indicators to finance working capital requirements and expansion in the spinning and weaving segment are expected to improve over the rating horizon.

For further information on this rating announcement, please contact Ms. Asfia Aziz (Ext: 212) or the undersigned (Ext: 207) at (021) 35311861-66 or email at

Sara Ahmed

VIS Entity Rating Criteria: Corporates (August 2021)

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 2022 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

VIS Credit Rating Company Limited