Press Release
VIS Reaffirms Entity Rating of Indus Dyeing & Manufacturing Company Limited
Karachi, December 26 2025: VIS Credit Rating Company Limited (VIS) reaffirms the entity ratings of Indus Dyeing & Manufacturing Limited at ‘A+/A1’ (Single A Plus/A One). Long-term entity rating of ‘A+’ reflects good credit quality; Protection factors are adequate. Risk factors may vary with possible changes in the economy. Short-term rating of ‘A1’ reflects strong likelihood of timely repayment of short-term obligations with excellent liquidity factors. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on October 25, 2024.
Indus Dyeing & Manufacturing Company Limited (IDMC), incorporated in 1957, is a public listed company engaged in the manufacture and export of yarn, primarily to China, with production facilities in Hyderabad, Karachi and Muzaffargarh and its registered office in Karachi. IDMC is the flagship and holding company of the Indus Group, overseeing subsidiaries in yarn manufacturing, home textiles, wind energy and a minority stake in an associated textile company.
The business risk profile of the upstream textile spinning sector remains elevated in FY25–1QFY26, largely due to sustained pressure on margins. High energy tariffs (~12.3 cents/kWh versus ~6.3 cents/kWh in regional markets) continue to undermine cost competitiveness, while the 18% sales tax on imported inputs has tightened liquidity through higher working-capital lockups. Export performance also remained weak, with basic cotton yarn exports contracting by 28.8% to USD 680.7m in FY25. In addition, the shift from FTR to the NTR regime and the applicability of Super Tax have increased the effective tax burden to ~29%. Although monetary easing offers some relief, sector prospects remain dependent on energy cost rationalization and efficiency improvements.
The assigned ratings are underpinned by IDMC’s position as the flagship and holding company of the Indus Group, anchoring the Group’s operations while providing strategic oversight across its subsidiaries. The Company has a long-standing presence in textile spinning with multiple manufacturing bases, benefiting from established customer relationships and a well-recognized market profile. Revenue in FY25 remained largely stable relative to FY24 despite market headwinds in exports, while margins were supported by lower finance costs, favorable taxation under the group taxation arrangement and dividend income from a subsidiary. Capital structure remains moderately leveraged, with gearing continuing below 1.0x, while liquidity is supported by sizeable short-term investments. Although operating cashflows were under pressure in FY25, early 1QFY26 results indicate a partial recovery.
Going forward, stable leverage and routine capital expenditure are expected to sustain the Company’s financial profile, with gross margins expected to remain largely unchanged.
For further information on this ratings announcement, please contact 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria: Corporates
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf