Press Release
VIS Credit Rating Company Maintains Entity Ratings of Rizwan Enterprises
Karachi, April 23, 2020: VIS Credit Rating Company Limited has maintained entity ratings of Rizwan Enterprises (RE) at ‘A-/A-2’ (A Minus/A-Two) to Rizwan Enterprises (RE). The assigned ratings have been placed on ‘Rating Watch-Developing’ status. Long Term Rating of ‘A-’ reflects good credit quality with adequate protection factors. Risk factors may vary with possible changes in the economy. Short Term Rating of ‘A-2’ signifies good certainty of timely payment, sound liquidity factors and company fundamentals, and good access to capital markets. Risk factors are small. The previous rating action was announced on January 13, 2020.
Rizwan Enterprises (RE) is a moderate size partnership concern engaged in manufacture and sale of textile products. Majority of company’s sales are exported and comprise fabric while made-ups represent a small proportion of revenues. The assigned ratings derive strength from RE’s long experience in its business segment, strong growth momentum in sales and profitability and adequate business risk profile. Ratings also draw comfort from the firm’s sound financial profile as reflected by strong cash flows in relation to outstanding debt, healthy debt servicing ability and robust coverage of short term borrowings. Ratings take note of the relatively moderate scale of operations and partnership structure of the organization. Ratings take into account the company’s ability to achieve revenue growth through expansion, while ensuring growth in margins and profitability, along with committed policy to maintain strong capitalization indicators.
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 capital structure and 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. Muhammad Ibad Desmukh (Ext: 205) 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 (May 2019)
https://s3-us-west-2.amazonaws.com/backupsqlvis/docs/Corporate-Methodology-201904.pdf