Press Release

Ratings of Kohinoor Mills Limited placed on ‘Rating Watch-Negative’ Status

Karachi, April 27, 2020: VIS Credit Rating Company Limited (VIS) has maintained the entity ratings of Kohinoor Mills Limited (KML) at ‘BBB+/A-2’ (Triple B-Plus/A-Two), while the same has been placed on ‘Rating Watch-Negative’ status. The medium to long-term rating of ‘BBB+’ denotes adequate credit quality with reasonable and sufficient protection factors. Moreover, risk factors are considered variable with possible changes in economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments coupled with sound liquidity and fundamental protection factors. The previous rating action was announced on March 11, 2019.

KML is export oriented listed company, principally engaged in the business of textile manufacturing covering weaving, bleaching, dyeing, and generation & supply of electricity for internal consumption. The company offers a diverse product range including various textures specifications and finishes. This has enabled the company to differentiate its product in the international market and become key supplier for globally renowned brands in the garments industry. Exports sales contributed around four-fifth to the topline over years. The company has also enhanced its operating capacity of weaving and dyeing division over the last two years.

The revision in rating outlook reflects prevailing uncertainty in textile sector dynamics due to coronavirus outbreak, prolonged lockdown, overall contraction in demand and challenging economic environment. 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. With the demand compression emerging from ongoing global crisis and continued lockdown situation, which will virtually impact the entire textile value chain, ratings are being placed on ‘Negative’ outlook. Ratings remain dependent on maintaining cash flow coverages and prudent leverage indicators. VIS will closely monitor and will accordingly take action to resolve the outlook status.

For further information on this rating announcement, please contact Ms. Tayyaba Ijaz 042-35723411-13 (Ext. 8004) and/or the undersigned at 021-35311861-66 (Ext. 306) or email at info@vis.com.pk




Faryal Ahmad Faheem
Deputy CEO

Applicable rating criterion: Corporates (May 2019)
http://vis.com.pk/kc-meth.aspx

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