Press Release

VIS Places the Ratings of Arshad Corporation (Private) Limited on Rating Watch-Developing

Karachi, June 8, 2026: VIS Credit Rating Company Limited (VIS) has maintained the entity ratings of Arshad Corporation (Private) Limited (‘ACL’ or ‘the Company’) at ‘A-/A2’ (Single A Minus/A Two) with Rating Watch-Developing. The 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. The short-term rating of ‘A2’ denotes good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Previous rating action was announced on May 09, 2025.

The placement of the ratings on Rating Watch–Developing reflects the ongoing merger between ACL and its associated company Arshad Textiles (Private) Limited (ATPL), the financial and operational impact of which will be assessed post completion of the merger process. The ratings reflect the Company’s broadly stable financial profile, despite elevated leverage ratio. The ratings incorporate consistent revenue growth, supported by increasing demand in the garment and bedsheet segments, along with strategic initiatives such as solar power investments to offset rising utility costs. In FY25 and 1HFY26, the Company successfully recovered net profitability, driven by reduced financial charges and lower tax incidence, despite slight erosion in gross margins. Liquidity indicators remain adequate, with a modest improvement in the current ratio. However, debt coverage metrics have weakened due to increased borrowing for solar transition cost, product diversification, and BMR projects. Capitalization ratios remain stretched, with leverage and gearing levels reflecting the Company’s reliance on debt-funded growth. Going forward, the ratings remain sensitive to the realization of merger synergies, primarily in terms of profitability, cash flow generation and capitalization ratios.

For further information on this ratings announcement, please contact at 021-35311861-64 or email at info@vis.com.pk

Applicable 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

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 June 08, 2026 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.