Press Release

VIS Assigns Initial Ratings to Arshad Corporation (Pvt.) Limited

Karachi, April 03, 2019: VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘BBB+/A-2’ (Triple B-Plus /A-Two) to Arshad Corporation (Pvt.) Limited (ACL). The medium to long-term rating of ‘BBB+’ denotes adequate credit quality coupled with reasonable protection factors. Moreover, risk factors are considered variable if changes occur in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments. Liquidity factors and company fundamentals are considered sound. Outlook on the assigned ratings is ‘Stable’.

ACL is an export-oriented composite textile unit and primarily operates four business segments, including grey fabric, fabric processing, garments and home textile made-ups. The U.S. and Europe are primary target markets and account for 80% of total sales. Shareholding of the company is held by sponsoring family, who have been in the industry since 1954. The assigned ratings take into account ample experience of sponsors, established relations with the suppliers and customers, and integrated operations. ACL is one of few industry players in Pakistan who have capabilities to manufacture service uniforms. The ratings also factor in maintenance of adequate margins over the years. Being primarily an export oriented company, recent rupee devaluation also bodes well for the profitability. However, the ratings are constrained by strong competition from local and regional textile players and vulnerability to changes in yarn and fabric prices amidst lack of pricing power. The ratings also incorporate relatively high leverage indicators and cash conversion cycle, though ACL’s capacity to meet its long-term financial obligations is considered adequate.

For further information on this rating announcement, please contact undersigned or Mr. Maimoon Rasheed at 021-35311861-70/042-35723411 or fax to 021-35311872-3.


Javed Callea
Advisor

VIS Entity Rating Criteria Industrial Corporate (May 2016)
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 03, 2019 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.