Press Release

JCR-VIS Assigns Initial Ratings to Naveena Industries Limited

Karachi, December 31, 2018: JCR-VIS Credit Rating Company Limited (JCR-VIS) has assigned initial entity ratings of ‘BBB+/A-2’ (Triple B Plus/A-Two) to Naveena Industries Limited (NIL). Outlook on the assigned ratings is ‘Stable’.

Naveena Industries Limited (NIL) was incorporated in 1966 as a small embroidery unit and currently serves as the weaving unit of Naveena Group. Majority of NIL’s sales are geared towards the export market for greige cloth spun from yarn of medium to fine count. Major clients include companies in Europe, USA and China that are involved in home textiles and specialized apparel production (medical, engineering and construction).

Assigned ratings incorporate the medium size operations of the company, single product (greige and dyed fabric), manageable leverage indicators and adequate margins. Ratings are constrained by increasing quantum of debt repayments; furthermore, corporate governance framework depicts room for improvement.

Given higher borrowings and resultantly finance cost, profit before tax exhibited a slight increase year on year. However owing to tax reversals in FY18 profit after tax has witnessed improvement. On the back of improved profitability, cash flows increased year on year, however, debt service coverage ratio declined as a result of higher repayment of debt which is expected to increase further in the next couple of years. Cash flow generation ability of the company is considered sufficient to cover debt repayments.

The equity base of NIL at end FY18 increased on account of increasing trend of unappropriated profit witnessed during the course of the last three years coupled with the intermittent and decreasing nature of dividend payments. Gearing has increased due to the aforementioned increase in borrowings. Gearing is expected to decrease going forward since NIL does not plan to take on additional debt.

For further information on this rating announcement, please contact the undersigned (Ext: 201) at 021-35311861-70 or fax to 021-35311872.



Javed Callea
Advisor

Applicable Criteria: Industrial Corporates (May 2016)
http://www.jcrvis.com.pk/docs/Corporate-Methodology-201605.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, 2018 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.