Press Release
VIS Maintains Entity Ratings of Lucky Knits (Pvt.) Limited
Karachi, April 29, 2020: VIS Credit Rating Company Limited (VIS) has maintained entity ratings of Lucky Knits (Pvt.) Limited (LKPL) at ‘A-/A-1’ (Single A Minus/A-One). The assigned ratings have been placed on ‘Rating Watch-Developing’ status. Long term entity rating of ‘A-’ reflects good credit quality, adequate protection factors. Risk factors may vary with possible changes in the economy. Short Term Rating of ‘A-1’ indicates high certainty of timely payment, liquidity factors are excellent and supported by good fundamental factors. Risk factors are minor. The previous rating action was announced on March 18, 2019.
LKPL is engaged in the manufacturing and exports of knitted apparel with product line ranging from T- shirts, polo shirts, hoodies, trousers and undergarments. Operations of the company are carried out through four production units located in Karachi, Sindh. All the production segments operated at nearly full capacities during FY18 and FY19. With power requirements of the organization met by an associate group company, Lucky Energy, LKPL enjoys a competitive edge over other industry players. Ratings draw support from demonstrated track record of support from its sponsors, Yunus Brother Group, a reputable conglomerate with strong financial profile and presence in diversified sectors including textiles, building materials, real estate, power generation, chemicals, pharmaceuticals, food and automotive sectors.
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 Mr. Javed Callea (Ext: 201) or Ms. Muniba Abdullah, CFA (Ext. 215) 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