Press Release
VIS Maintains Entity Ratings of Master Textile Mills Limited
Karachi, April 28, 2020: VIS Credit Rating Company Limited (VIS) has maintained entity ratings of Master Textile Mills Limited (MTML) at ‘A/A-1’ (Single A/A-One). The assigned ratings have been placed on ‘Rating Watch-Developing’ status. The medium to long-term rating of ‘A’ denotes good credit quality with adequate protection factors. Moreover, risk factors may vary with possible changes in economy. The short-term rating of ‘A-1’ denotes high certainty of timely payments coupled with excellent liquidity and good fundamental protection factors. The previous rating action was announced on April 18, 2109.
MTML operates as a family owned business with the shareholding vested among individuals of the sponsoring family and its associated concerns. The assigned ratings take into account the company’s association with the Master Group, having interest in mattress business, textiles, automobile, engineering, chemical and energy sectors. The company also holds 100% shares in the Master Power (Pvt.) Limited (MPL) (A subsidiary company). MTML is a vertically integrated composite unit comprising spinning, weaving, denim, processing and apparel. The product portfolio broadly includes yarn, grey and dyed cloth, denim and garments. Dyed & denim and garments have remained the major revenue drivers. Export sales have contributed around four-fifth to the company’s topline over years, with around 73% of total sales is attributed to Asia and Europe.
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 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, warranting a ‘Rating Watch-Developing’ status. Given the low leveraged capital structure and sound 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 Ms. Tayyaba Ijaz at 042-35723411-13 (Ext. 8004) and/or the undersigned at 021-35311861-66 (Ext. 306) or email at info@vis.com.pk
Faryal Ahmad Faheem
Deputy CEO
Applicable rating criterion: Corporates (May 2019)
https://www.vis.com.pk/kc-meth.aspx