Press Release
VIS Reaffirms Entity Rating of Indigo Textile (Private) Limited
Karachi, September 10, 2025: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Indigo Textile (Private) Limited (‘ITPL’ or ‘the Company’) at A/A1’ (‘Single A /A One). Medium to long-term rating of ‘A’ reflects good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. Short-term rating of ‘A1’ indicates strong likelihood of timely repayment of short-term obligations with excellent liquidity factors. Outlook on the assigned rating is ‘Stable’. Previous rating action was announced on July 19, 2024.
ITPL, a joint venture between Akhtar Group and Haji Khuda Bux Amir Umar Group, has over two decades of experience in denim manufacturing and exports, producing premium fabrics for both core and fashion segments of the global market. The company’s head office and manufacturing facilities are located in Karachi.
Pakistan’s textile sector, contributing approximately 55% of exports and 8.5% of GDP in 9MFY25, remains vital despite facing challenges. Domestic cotton production declined sharply, increasing reliance on imports, which currently offer cost and quality benefits. Exports rose 7.9% year-on-year to USD 17.9 billion, driven by value-added segments. New policies support local spinning but raise input costs for textile exports. External pressures, including US tariffs and rising local costs, are squeezing margins. However, firms investing in renewable energy and benefiting from rupee depreciation may offset some of these challenges and maintain competitiveness.
The assigned ratings reflect the company’s established position in the denim fabric export market, supported by longstanding customer relationships, a diversified client base, and an emphasis on value-added product offerings. The company caters to both direct and indirect export markets, with indirect exports forming the majority of sales.
Revenue grew significantly in FY24, driven by higher effective selling prices on account of rupee depreciation and a partial recovery in demand from key export destinations, while sales momentum was sustained in 9MFY25 on the back of steady order flows from major clients. Profitability came under pressure from elevated input costs, particularly energy and imported raw materials, resulting in margin compression. Increased operating expenses and higher finance costs further weighed on bottom-line performance. The company remains focused on sustaining export volumes and maintaining its client base.
The ratings also take into account Indigo’s financial risk profile. The capital structure remains moderately leveraged, with gearing at manageable levels supported by retained earnings. Liquidity and debt service coverage are considered adequate, with short-term borrowings comfortably covered by inventory and receivables. Ratings remain sensitive to the company’s ability to improve profitability margins while maintaining its overall financial risk profile.
For further information on this ratings announcement, please contact on 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