Press Release

VIS maintains Ratings of Sadaqat Limited with ‘Rating Watch-Negative’ status

Karachi, April 15, 2020: VIS Credit Rating Company Limited (VIS), while maintaining the entity rating of ‘A/A-2’ (Single A /A-Two) assigned to Sadaqat Limited (SL), has placed the same on ‘Rating Watch - Negative’ status. The medium to long-term rating of ‘A’ denotes good credit quality coupled with adequate protection factors. Moreover, risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments. Liquidity factors and company fundamentals are considered sound. VIS has also placed the preliminary instrument rating of single ‘A’ (Single A) assigned to the proposed secured, privately placed, Term Finance Certificates (TFC) of SL on ‘Rating Watch - Negative’ status. The previous rating action was announced on January 29, 2020.

SL is value-added textile units operating from Faisalabad. SL is mainly involved in manufacturing and export of a wide range of home textile products and holds nearly 5% - 7% market share of annual bed ware exports.

With the advent of global Coronavirus disease (COVID-19) pandemic, the demand outlook for textile products in general and especially value added export oriented units looks weak. Given SL is entirely dependent on exports sales for cash flows generation and servicing of its financial obligations, status of the assigned rating is therefore uncertain as an event of deviation from expected trend has occurred; additional information will be necessary to take any further rating action, warranting a ‘Rating-Watch’ status. With the demand compression emerging from ongoing global economic crisis and continued lockdown situation, ratings are being placed on ‘Negative’ outlook. The ratings are dependent upon maintenance of overall sales, market share in exports, profit margin, debt service coverage, and gearing ratios at an adequate level, with outlook subject to be reviewed once the situation stabilizes.


For further information on this rating announcement, please contact Syed Fahim Haider at 042-35723411-13 (Ext: 8006) or the undersigned at 021-35311861-70 (306) or mailto:info@vis.com.pk





Faryal Ahmad Faheem
Deputy CEO

Applicable rating criterion: Corporates (May 2019)
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 April 15, 2020 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.