Press Release
VIS Reaffirms Entity Ratings of Kohinoor Mills Limited
Karachi, December 3, 2025: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Kohinoor Mills Limited at ‘BBB+/A2’ (Triple B Plus/A Two). The medium to long-term rating of ‘BBB+’ indicates adequate credit quality; Protection factors are reasonable and sufficient. Risk factors are considered variable if changes occur in the economy. The short-term rating of ‘A2’ signifies good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Outlook on the assigned rating is ‘Stable’. Previous rating action was announced on November 8, 2024.
Kohinoor Mills Limited (‘KML’ or ‘the Company’) is a public listed company incorporated in 1987, principally engaged in the business of textile manufacturing covering weaving, bleaching, dyeing of fabric and recently added production of garments. The Company is also in the business of trading in yarn, cloth and other goods made from raw cotton and synthetic fiber, as well as generation and supply of electricity. The Company’s corporate governance framework is deemed satisfactory.
Assigned ratings reflect high business risk encountered by textile exporters emanating from declining domestic cotton production, reliance on costly imports, and persistent high energy costs and new taxes, all having adverse impact on profit margins across the sector. Furthermore, damage to the cotton crops caused by floods in recent months could further raise supply chain and cost-side challenges for textile companies in Pakistan.
In FY25, the Company’s topline decreased slightly mainly due to lower export volume while gross margin also stood lower on account of higher raw material costs. However, net profitability improved slightly mainly on the back of lower finance costs. The long-term borrowings increased; mobilized primarily for establishing garments division and installing of solar power. Moreover, for higher working capital requirement, the short-term borrowings also stood higher thereby slightly increasing gearing, though remained within the acceptable levels. Debt coverage metrics weakened mainly amid decrease in operating cash flows. The strain on liquidity was evidenced by weakened current ratio and a significant increase in outstanding sales tax receivables.
The management has been following a strategy to improve margins and enhance cost-efficiencies. The commissioning of a 4.5 MW solar plant and installation of a new biomass heater for steam generation have been recently achieved. The Company has also launched a new Garments Division with 5,000 garments daily capacity with a long-term goal of 15,000 garments daily capacity. Going forward, attaining projected growth in topline, strengthening debt coverages and liquidity indicators while decreasing leverage indicators would be important rating considerations.
For further information on this ratings announcement, please contact at 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