Press Release

VIS maintains Ratings of Union Apparel (Private) Limited with ‘Rating Watch-Negative’ status

Karachi, April 24, 2020: VIS Credit Rating Company Limited (VIS), while maintaining the entity rating of ‘ ‘BBB/A-2’ (Triple B Plus/A-Two) assigned to Union Apparel (Private) Limited (UAPL), has placed the same on ‘Rating Watch - Negative’ status. Long Term Rating of ‘BBB’ denotes adequate credit quality; protection factors are reasonable and sufficient. Risk factors are considered variable if changes occur in the economy. Short Term Rating of ‘A-2’ signifies good certainty of timely payment. Liquidity factors and company fundamentals are sound. Access to capital markets is good. Risk factors are small. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on December 17, 2019.

Setup in 2016, UAPL is a wholly-owned subsidiary of Union Fabrics (Private) Limited (UFPL), engaged in manufacture and sale of fabric to leading brands in the local market. The assigned ratings incorporate medium-size operations of the company with manageable leverage indicators, adequate margins and sufficient cash flow position in relation to outstanding debt. Ratings also factor in UAPL’s satisfactory order book position which provides adequate revenue visibility in the medium term.

With the advent of global Coronavirus disease (COVID-19) pandemic, the demand outlook for textile products in general and especially value added export oriented units looks weak. Accordingly 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 economic crisis and continued lockdown situation, ratings are being placed on ‘Negative’ outlook. The ratings are dependent upon maintenance of overall sales, profit margin, debt service coverage, and gearing ratios at an adequate level, with outlook subject to be reviewed once the situation stabilizes.


For further information on this rating announcement, please contact Mr. Muhammad Ibad Desmukh (Ext: 205) or the undersigned (Ext: 306) at (021) 35311861-66 or email at info@vis.com.pk.


Faryal Ahmad Faheem
Deputy CEO


Applicable Rating Criteria: Industrial Corporates (May 2019)
http://vis.com.pk/kc-meth.aspx

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