Press Release

VIS Credit Rating Company Assigns Initial Entity Ratings to Towellers Limited

Karachi, January 07, 2022: VIS Credit Rating Company Limited has assigned an initial entity ratings to Towellers Limited at ‘A/A-1’ (Single A Plus/A-One). Long Term Rating of ‘A’ denotes good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. Short Term Rating of ‘A-1’ signifies high certainty of timely payment; liquidity factors are excellent and supported by good fundamental protection factors; and risk factors are minor. Outlook on the assigned ratings is ‘Stable’.

Incorporated in 1973 as a private limited company with subsequent conversion into a Public Limited Company in 1994, Towellers Limited is principally engaged in exports of knitted garments and home textiles. The Company has manufacturing facilities based in Federal B. Area and North Karachi Industrial Area, Karachi.

Assigned ratings underpins experience of the management team along with sound financial indicators. Ratings take into account steady growth in revenues and profitability supported by sound margins and conservative capital structure. Ratings are also supported by positive momentum in exports of value-added segment of the textile industry on the back of recovery in international markets and export-oriented policies of the government. Going forward, prospects remain strong. Ratings draw comfort from the undergoing BMR projects in the Company to boost operational efficiencies.

Assessment of financial risk profile encapsulates strong revenue growth in FY21 and onwards, with subsequent translation of the same into profitability indicators. Revenues were impacted in FY20 amid pandemic with decline in hospitality industry globally and closures of international markets. However, sales picked momentum during the outgoing year with gradual recovery of international markets. Consequently, margins improved and recouped to pre-COVID levels in FY21 despite increase in distribution expenses on account of surge in freight charges globally. On account of increase in profitability, cash flows depict improvement. Liquidity profile is also strong. Ratings take into account conservative financial policies of the Management. Capitalization indicators remain strong on account of zero gearing and low leverage levels. Growth is equity base due to higher profit generation provides comfort. The Company plans to undertake long term financing going forward mainly for working capital, albeit remaining conservative. Sustainability of margins and improvement in profitability along with maintenance of capitalization indicators will remain important for ratings.

For further information on this rating announcement, please contact Ms. Sara Ahmed (Ext: 207) or Ms. Faryal Ahmad Faheem (Ext: 306) at 021-35311861-66 or email at info@vis.com.pk.






Saeed Khan
Executive Director

Applicable Criteria: Industrial Corporates (August 2021)
https://docs.vis.com.pk/docs/CorporateMethodology202108.pdf

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 .