Press Release

JCR-VIS Reaffirms Entity Ratings of Sadaqat Limited

Karachi, December 31, 2015: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the medium to long term entity rating of Sadaqat Limited (SL) at ‘A-’ (Single A Minus) and short-term entity rating at ‘A-2’ (A-Two). Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on January 01, 2015.
Ratings assigned to SL reflect its stable revenues, adequate coverages and improved operational efficiency. As an export oriented company, SL specializes in value added fabrics and home textile. Performance of the textile sector remained subdued reflected by declining export revenues as cotton and yarn prices remained depressed coupled with slowdown in some of the leading export markets.
Gross margins declined during FY15 on account of lower average selling price and volumetric reduction in sales; however continue to remain relatively high owing to focus on value addition and improving efficiencies. In the coming years, margins are expected to sustain while improved revenues is projected to positively reflect on the bottom line and cashflows of the company. Concentration among customer base remains high; long term association with customers involving internationally recognized brands mitigates the associated risks.
In the recent years, the management focus has remained on upgrading production facilities in order to achieve higher operational efficiency. Total debt of the company increased during outgoing year on account of higher utilization of short-term borrowings; at current debt levels, principal payments due in the on-going year are expected to be met by the internal cash generation. Funding for the upcoming CAPEX is projected to be arranged mainly through external sources. Efficiency enhancements from the planned CAPEX are likely to strengthen company’s cash flows to meet debt servicing requirements over the medium to long term.
For further information on this rating announcement, please contact the undersigned at 021-35311861-70 (10 lines) or Mr. Maimoon Rasheed at 042-35723411-13.



Jamal Abbas Zaidi
Advisor

Applicable Criteria: Industrial Corporates (Oct. 2003) http://www.jcrvis.com.pk/images/IndustrialCorp.pdf

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 December 31, 2015 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.