Press Release
VIS Revises Rating of International Textile Limited
Karachi, February 09, 2022: VIS Credit Rating Company Limited (VIS) has downgraded the entity ratings of International Textile Limited (ITL) from ‘A/A-2’ (Single A/Single A-Two) to ‘A-/A-2’ (Single A Minus/Single A-Two). The outlook on the assigned ratings have been revised from ‘Rating Watch- Developing’ to the ‘Stable’. The medium to long-term rating of ‘A-’ denotes good credit quality with adequate protection factors. Risk factors may vary with possible changes in the economy. The short term rating of ‘A-2’ signifies good certainty of timely payment. Liquidity factors and company fundamentals are sound. Access to capital markets is good. Risk factors are small. Previous rating action was announced on May 11, 2020.
Incorporated in 1985, ITL is a vertically integrated company engaged in spinning, sizing, processing of yarn, manufacturing of fabric, terry and their made ups. Downward revision in ratings is reflective of the company’s relatively high business risk vis-à-vis other textile players emanating from the demand sensitive segment of the textile made-ups targeted towards hotels, restaurants, food chains and hospitals. These businesses are impacted by the ongoing COVID-19 situation where new waves are emerging every few months.
The company is primarily an export oriented company as the same constitute more than 95% of overall sales. Financial assessment for FY21 reflects lower revenue due to the market slowdown specifically in the hotels and restaurants sector due to COVID-19. Going forward, management expects sales to escalate on account of adequate orders in pipeline given gradual recovery in the economic conditions along with planned expansion plans in the MJS segment. Liquidity indicators also weakened in FY21 due to net loss incurred; some improvement has been observed in 1QFY22 which is important to continue, going forward. Moreover, the revised ratings incorporate the additional funds planned to be drawn for the expansion in the ongoing year wherein leverage indicators are expected to increase. The assigned ratings remain dependent on maintenance of liquidity & capitalization metrics in line with the assigned rating.
For further information on this rating announcement, please contact Ms. Asfia Aziz or the undersigned (Ext: 306) at (021) 35311861-66 or email at info@vis.com.pk
Faryal Ahmad Faheem
Deputy CEO
Applicable Rating Criteria: Industrial Corporates (August 2021)
https://docs.vis.com.pk/docs/CorporateMethodology202108.pdf