Press Release

VIS Credit Rating Company Maintains Entity Ratings of Indus Lyallpur Company Limited

Karachi, April 22, 2020: VIS Credit Rating Company Limited (VIS) has maintained entity ratings of Indus Lyallpur Company Limited (ILCL) at ‘BBB+/A-2’ (Triple B Plus/A-Two). The assigned ratings have been placed on ‘Rating Watch-Developing’ status. Long Term Rating of ‘BBB+’ denotes good credit quality and reasonable and sufficient protection factors. Risk factors are considered variable if changes occur in the economy. Short Term Rating of ‘A-2’ signifies good certainty of timely payment, sound liquidity factors and company fundamentals. Access to capital markets is good. Risk factors are small. The previous rating action was announced on September 20, 2019.

Assigned ratings to ILCL incorporate the company’s association with Indus Group of companies which has an established track record in the textile sector and has strong financial profile. ILCL operates through a manufacturing facility located in Faisalabad with 24,960 spindles installed. Moreover, addition of 14,500 European ring frames is in process.

The revision in rating outlook reflects prevailing uncertainty in textile sector dynamics due to coronavirus outbreak, prolonged lockdown, overall contraction in demand, sharp decline in cotton prices 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 strong sponsor 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. Talha Iqbal (Ext: 213) or the undersigned (Ext. 306) 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

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. VIS, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report. VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright April 22, 2020 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.