Press Release
VIS Maintains Entity Rating of Union Fabrics (Private) Limited
Karachi, April 20, 2026: VIS Credit Rating Company Limited (VIS) has maintained the entity ratings of Union Fabrics (Private) Limited (‘UFPL’ 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. The ratings outlook, previously placed on ‘Rating Watch – Developing’, is revised to ‘Stable’ following Company’s merger with its wholly owned subsidiary ‘Union Apparel (Pvt) Limited’. Previous Rating action was announced on March 20, 2025.
Incorporated in 1992, Union Fabrics (Pvt) Limited was incorporated as a private limited company whose principal activity is manufacturing and exports of Textile bedding, roll on tube, Mattress ticking and sizable portion of local apparel segment and provide other relative services. The registered office of the Company is situated at S.I.T.E, Karachi.
The assigned ratings reflect the business risk profile of the textile weaving and apparel sector, which faces structural challenges including declining domestic cotton production, high energy tariffs, and rising labor costs. While exports benefit from demand in value-added segments and relatively favorable tariff dynamics, the sector remains exposed to regional competition, policy changes, and input cost volatility, which constrain overall profitability and growth.
UFPL has an established presence across the textile value chain, with a diversified product portfolio spanning both domestic and export markets. The merger with its wholly owned subsidiary has strengthened the business profile by creating operational synergies, cost efficiencies, and an expanded asset base. The Company’s strong relationships with international buyers and leading local retailers, along with steady demand in value-added segments, support revenue stability.
Meanwhile, the financial risk profile reflects a leveraged capital structure, modest profitability, and working capital-intensive operations. Margins have been under pressure due to higher depreciation, elevated energy costs, increased finance charges, and taxation. Nevertheless, liquidity indicators and debt service coverage remain adequate. Going forward, effective working capital management and continued focus on leverage reduction will be important to maintain the rating.
For further information on this ratings announcement, please contact on 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria:
VIS 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