Press Release
VIS Maintains Entity Ratings of Al-Karam Towel Industries (Private) Limited
Karachi, April 23, 2020: VIS Credit Rating Company Limited (VIS), while maintaining the entity ratings of ‘A-/A2’ (Single A Minus/A-Two) assigned to Al-Karam Towel Industries (Private) Limited (AKTI), has placed the same on ‘Rating Watch-Developing’ status. Long Term Rating of ‘A-’ reflects good credit quality with adequate protection factors. Risk factors may vary with possible changes in the economy. Short Term Rating of ‘A2’ signifies good certainty of timely payment, sound liquidity factors and company fundamentals, and good access to capital markets. Risk factors are small. Previous rating action was announced on March 3, 2020.
AKTI operates through total eight manufacturing units to carry out business operations (spinning, weaving, bleaching, dyeing and stitching); five of these units are located in SITE Super Highway, Karachi while three units are in Nooriabad Sindh. AKTI is an export-oriented company with around 98% of total sales catering to foreign markets. Client base primarily includes large international retail stores in USA and European countries (top five major export markets are UK, Germany, Denmark, Canada and Greece). Ratings assigned to AKTI incorporate the company’s strong market position (~10% share in towel exports) in towel sector and vertically integrated operations.
The revision in rating outlook reflects prevailing uncertainty in textile sector dynamics due to coronavirus outbreak, prolonged lockdown, overall contraction in demand and challenging economic environment. It is expected that the entire value chain of textile industry will be affected 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, warranting a ‘Rating Watch-Developing’ status. Given the adequate financial profile, it is expected that ratings will remain stable post recovery of the ongoing situation; nevertheless as scenario is evolving rapidly, VIS will closely monitor and will accordingly take action to resolve the outlook status.
For further information on this rating announcement, please contact Mr. Talha Iqbal (Ext: 213) 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