Press Release

VIS Reaffirms Entity Ratings of Union Apparel (Private) Limited

Karachi, December 07, 2021: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Union Apparel (Private) Limited (UAPL) at ‘A-/A-2’ (Single A Minus/ A-Two). Long Term Rating of ‘A-’ reflects good credit quality with adequate protection factors. Risk factors may vary with possible changes in the economy. Short Term Rating of ‘A-2’ signifies good certainty of timely payment, sound liquidity factors and company fundamentals, and good access to capital markets. Risk factors are small. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on January 6, 2021.

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. Ratings take note of improvement in profitability and liquidity indicators on a timeline basis; along with strong sponsor support and satisfactory order book position. Single client concentration has witnessed improvement on a timeline basis, however the same is considered to be on the higher side. Ratings draw comfort from long-term association of the parent company with reputed brands.

Assigned ratings incorporate moderate business risk profile of the company. Textile exports have largely recovered from the Covid-19 pandemic shocks and are still growing both in terms of their quantity and dollar value. The textile shipments have surged by 3.8% to $4.8 billion in 1QFY22 from $4.6bn in the corresponding period last year. The rise in the textile and clothing group has been slightly faster than the 0.6% growth in the overall export. The export recovery is most prominent in the knitwear, home textiles and denim segments. Favorable government policies for enhancing exports and improving country’s perception and law & order situation bode well for the textile sector. Conversely, increasing cost of doing business and reduction in rebate rates may impact margins for selected players.
Assessment of financial risk profile reflects improvement in profitability, gross margins and liquidity indicators of the company. Given projected increase in debt levels, management expects leverage levels to remain within manageable levels in support with improved profitability profile. Ratings remain dependent on maintenance of gearing at current levels and improving leverage levels, going forward.

For further information on this rating announcement, please contact Ms. Asfia Aziz or the undersigned (Ext: 306) at (021) 35311861-66 or email at info@vis.com.pk.



Faryal Ahmad Faheem
Deputy CEO


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 2021 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .