Press Release

JCR-VIS assigns Entity Ratings to Nishat (Chunian) Limited

Karachi, January 27, 2012: JCR-VIS Credit Rating Company Limited (JCR-VIS) has assigned medium to long-term and short term entity ratings of ‘A-’ (Single A Minus) and ‘A-2’ (A Two), respectively to Nishat (Chunian) Limited (NCL). JCR-VIS has also reassessed medium to long term rating assigned to TFC issue of Rs 500 million of NCL to ‘A’ (Single A). Outlook on the assigned ratings is ‘Stable’.

Given the rise in demand of textile products particularly yarn in the international markets, textile sector posted exceptional results in FY11. However, the prices have fallen considerably since last quarter of the out-going financial year, imparting pressure on the sector. The ratings take into account future prospects for the industry given cyclical downturn in textile sector coupled with domestic issues such as energy shortages. JCR-VIS will closely monitor industry trends and the ratings may be revised accordingly.

While net profit of the company was higher in FY11, margins were lower largely on account of losses realized on the revaluation of cotton stock to net realizable value at June-end 2011. Despite increase in net profit, funds from operations remained at prior year’s level as significant portion of this income was earned from investment in Nishat (Chunian) Power Limited (NCPL). Following industry trends, bottom line results have remained strained in the on-going year with net loss reported in 1QFY12. While profitability and cash flows are expected to remain under stress, dividends anticipated from NCPL may provide some relief alongside serving as alternative source of cash generation.

Leverage indicators have nonetheless showcased some improvement owing to increase in net equity given profit retention. Moreover, concurrent to increase in total borrowings, debt coverage has declined on timeline basis. While borrowings of the company may decline in the ongoing year due to relatively lower working capital requirements, it may not ease debt coverage situation.

For further information on this rating announcement, please contact Mr. Rashid Zahir at rashid.zahir@jcrvis.com.pk or Mr. Maimoon Rasheed at 042-36610681-84.



Jamal Abbas Zaidi
Deputy CEO

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 2012 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .