Press Release

VIS Maintains Rating of Z.A. Corporation (Pvt.) Limited with ‘Rating Watch - Negative’ Status

Karachi, April 28, 2020: VIS Credit Rating Company Limited (VIS), while maintaining entity ratings of ‘BBB/A-2’ (Triple B/A-Two) assigned to Z.A. Corporation (Pvt.) Limited (ZAC), has placed the same on ‘Rating Watch - Negative’ status. The medium to long-term rating of ‘BBB’ denotes adequate credit quality coupled with reasonable & sufficient protection factors. Moreover, risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely repayment, sound liquidity factors and good company’s fundamentals. The previous rating action was announced on October 31, 2019.

ZAC is a medium-sized spinning unit located in Faisalabad. Shareholding of the company is vested with Sheikh Danish Ali who is actively involved in day to day affairs of the company. ZAC produces a wide range of coarse and fine counts, from 16/s to 80/s. The company has the ability to produce high-quality yarn of 100% cotton, blended and synthetic, and polyester/cotton blends, however, the sales mix depends on the customer orders. The company has showed high dependence on imported Viscose in the past 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. It is expected that the entire value chain of the textile industry will be effected by these developments. 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. Considering the limited scale of spinning operations of the company andlikely pressure on debt indicators, ratings are being placed on ‘Negative’ outlook. Nevertheless as scenario is evolving rapidly, VIS will closely monitor and will accordingly take action to resolve the outlook status. The ratings are dependent upon maintenance of overall sales, profit margin, debt service coverage, and gearing ratios at prudent levels.

For further information on this rating announcement, please contact Syed Fahim Haider at 042-35723411-13 (Ext: 8006) or the undersigned at 021-35311861-70 (306) or mailto:info@vis.com.pk


Faryal Faheem Ahmed
Deputy CEO

VIS Entity Rating Criteria: Corporates (May 2019)
https://www.vis.com.pk/kc-meth.aspx

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