Press Release

VIS Assigns Initial Ratings to Kohinoor Mills Limited

Karachi, March 11, 2019: VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘BBB+/A-2’ (Triple B-Plus /A-Two) to Kohinoor Mills Limited (KML). The medium to long-term rating of ‘BBB+’ denotes adequate credit quality coupled with reasonable protection factors. Moreover, risk factors are considered variable if changes occur in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments. Liquidity factors and company fundamentals are considered sound. Outlook on the assigned ratings is ‘Stable’.

KML is export oriented listed company, principally engaged in the business of textile manufacturing covering weaving, bleaching, dyeing, and generation and supply of electricity for internal consumption. The assigned ratings take into account its adequate scale of integrated textile operations. The ratings factor in moderate business risk profile; the company has been able to increase its revenues and largely sustain profitability in a highly competitive international market. Further, the ratings incorporate KML as a key supplier to globally renowned brands while maintaining an adequate customer concentration. Moreover, recent devaluation of Pak rupee and favorable government policies bode well for the company. The ratings also draw comfort from the company’s strong BoD profile, experienced management team and adequate corporate governance framework.

Although debt service coverage remains adequate, high gearing and leverage indicators expose KML to relatively higher financial risk and act as a rating constraint. While KML has been able steadily increase its turnover, decreasing margins and increasing international competition are key challenges faced by KML. The ratings are dependent upon reduction in leverage indicators and improvement in liquidity profile of the company.

For further information on this rating announcement, please contact undersigned (Ext: 201) or Mr. Maimoon Rasheed (Ext: 8008) at 35311861-70/ 042-35723411 or fax to 35311872-3.

Javed Callea
Advisor

VIS Entity Rating Criteria Industrial Corporate (May 2016)
https://www.vis.com.pk/kc-meth.aspx

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 March 11, 2019 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.