Press Release
VIS Reaffirms Entity Ratings of A. A. Spinning Mills Limited
Karachi, March 18, 2026: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of A. A. Spinning Mills Limited at ‘A-/A2’ (Single A minus/A Two). The medium-to long-term rating of ‘A-’ indicates good credit quality; protection factors are adequate. Risk factors may vary with changes in economic conditions. The short-term rating of ‘A2’ indicates a good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Outlook on the assigned rating remains ‘Stable’. Previous rating action was announced on January 15, 2025.
A. A. Spinning Mills Limited (‘AASML’ or ‘the Company’) was incorporated in 2003 and commenced its commercial operations in 2006. The principal business of the Company is manufacturing and sale of yarn from cotton and/or man-made fiber. Assigned ratings incorporate the business risk profile of the domestic spinning sector, which continues to face challenges including high energy costs, local raw material availability constraints, and intense competition. Despite these challenges the Company has maintained steady performance.
Net sales declined in FY25 due to lower volumes amid competition from cheaper imports but recovered in 1HFY26 on improved demand and pricing. The customer base remains moderately concentrated. Margins came under pressure in 1HFY26 from lower prices and higher operating costs, although net profitability improved due to reduced finance costs. Capitalization ratios increased owing to higher short-term borrowings before easing out at end-1HFY26 with some deleveraging. Cash flow generation weakened, affecting debt servicing capacity, while liquidity improved through higher cash balances and reduced reliance on short-term funding. Working capital needs rose due to inventory buildup and EFS policy changes though liquidity ratios improved in 1HFY26 with better receivables management and inventory turnover.
Stabilization in the domestic market is expected to support topline growth in the ongoing year while the Company has secured long-term borrowings for machinery upgrades and renewable energy, expected to support improvement in margins, going forward. Ratings will remain sensitive to improvement in debt coverage 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