Press Release
VIS Credit Rating Company Maintains Entity Ratings of Al-Karam Textile Mills (Private) Limited
Karachi, April 24, 2020: VIS Credit Rating Company Limited (VIS), while maintaining the entity rating of ‘A/A-2’ (Single A /A-Two) assigned to Al-Karam Textile Mills (Private) Limited (AKTMPL), 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. The previous rating action was announced on March 28, 2019.
Incorporated in 1986 as a private limited company, AKTMPL is principally engaged in manufacturing and sale of textile products. It is a vertically integrated company with diverse product portfolio including a variety of yarns ranging from coarse to fine counts, home textiles, institutional textiles and garments. Manufacturing facility of the company is based in Landhi Industrial Area.
The revision in rating outlook reflects prevailing uncertainty in textile sector dynamics due to coronavirus outbreak, prolonged lockdown, overall contraction in demand, sharp fall in cotton prices and challenging economic environment. It is expected that the entire value chain of the textile industry will be impacted by these developments. 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. Aforementioned operating dynamics coupled with leveraged capital structure of the company warrant a ‘Rating Watch-Negative’ status. The ratings are dependent upon maintenance of overall sales, profit margins, 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 Mr. Narendar Shankar Lal (Ext: 203) or the undersigned (Ext. 306) at 021-35311861-70 or email at info@vis.com.pk.
Faryal Ahmad Faheem
Deputy CEO
Applicable Rating Criteria: Industrial Corporates (April 2019)
https://s3-us-west-2.amazonaws.com/backupsqlvis/docs/Corporate-Methodology-201904.pdf