Press Release
JCR-VIS Upgrades Rating of Sadaqat Limited to A-
Karachi, June 02, 2009: JCR-VIS Credit Rating Company Limited (JCR-VIS) has upgraded the entity ratings of Sadaqat Limited (SL) to ‘A-/A-2’ (Single A Minus / A-Two) from ‘BBB+/A-3’ (Triple B Plus / A-Three). Preliminary rating assigned to the privately placed TFC of Rs. 400 million has also been upgraded to ‘A’ (Single A). Outlook on the assigned ratings is ‘Stable’.
SL has recently been converted into a public limited company. The upgrade takes into account the substantial growth in revenues of SL while maintaining healthy gross and cash margins over the last few years. The company has maintained leverage and the capital structure allows funds flow to be sufficient for debt servicing. SL plans an IPO in the near future which would also improve its capitalization and establish access to capital markets.
The textile sector has been faced with several issues including high cost of production, energy shortage, and cut-throat competition from other regional players. The value added segment has fared better in terms of sales and the rupee devaluation against dollar has provided considerable support to revenues of export based units. While SL sales have trended upwards in these adverse circumstances, these may come under stress if the global recession continues over an extended time period. SL requires further diversification in customer base and increased marketing efforts to strengthen its competitive position.
For further information on this rating announcement, please contact the undersigned (Ext: 501) or Ms. Sabeen Saleem (Ext: 510) at 021-5311861 or fax to 021-5311873.
Safdar Kazi
Director