Press Release
VIS Maintains Entity Rating of Crescent Bahuman Limited
Karachi, June 27, 2025: VIS Credit Rating Company Limited (VIS) maintains the entity ratings of Crescent Bahuman Limited (“CBL” or “the Company”) at 'A-/A2' (‘Single A Minus/A Two’). Medium to long term rating of 'A-' indicates good credit quality; Protection factors are adequate. Risk factors may vary with possible changes in the economy. Short term rating of 'A2' indicates good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Outlook on the assigned ratings remained ‘Stable’. Previous Rating action was announced on June 24, 2024.
Crescent Bahuman Limited is a public unlisted company operating a vertically integrated textile manufacturing unit specializing in denim production. The Company’s operations include spinning, weaving, washing, stitching, and finishing. CBL began commercial operations in June, 1995, and has since evolved into one of Pakistan’s leading denim exporters. The Company’s production facilities and sales office are located in Pindi Bhattian, near Sargodha, while its corporate headquarter is based in Lahore.
Pakistan’s textile sector faced challenges driven by economic cyclicality, intense competition, and structural constraints. Industry remains sensitive to demand fluctuations, exposing it to broader economic pressures. In 3QFY25, the sector demonstrated growth, primarily fueled by the value-added segment, despite challenges in domestic cotton production necessitating reliance on imported cotton. Exporter profitability remains vulnerable to cotton market volatility, inflationary pressures, and exchange rate fluctuations, while persistently high energy costs continue to strain overall cost structures. Furthermore, rising input costs and regulatory changes are creating a challenging environment for the sector.
The assigned ratings reflect the Company’s sustained revenue growth supported by a stable operational profile. The Company operates primarily in the export-oriented denim and garments segment, with a diversified customer base and geographical footprint across the United States, Europe, and other regions.
Despite top-line gains, profitability indicators remained constrained due to elevated freight costs, rising minimum wages, and lower average selling prices offered to attract new customers. These factors resulted in compression of gross and net margins during the review period. Management expects a gradual improvement in profitability, backed by procurement efficiencies and cost-saving initiatives in energy usage.
Ratings also incorporate the Company’s overall financial risk profile, where borrowings have remained at manageable levels, keeping the gearing ratio conservative. However, leverage remained elevated due to increased trade payables and a rise in short-term borrowings. Liquidity and debt service coverage remained adequate, while FFO coverage metrics declined in line with profitability. Ratings will remain sensitive to improvement and sustainability in profitability indicators.
For further information on this rating announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria: Industrial Corporates
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf