Press Release
VIS Reaffirms Entity Rating of Rizwan Enterprises
Karachi, September 19, 2025: VIS Credit Rating Company Limited (VIS) reaffirms the entity ratings of Rizwan Enterprises at ‘A-/A1’ (Single A Minus/A One). Long-term entity rating of ‘A-’ reflects good credit quality; protection factors are adequate. Risk factors may vary with possible changes in economy. Short-term rating of ‘A1’ indicates strong likelihood of timely repayment of short-term obligations with excellent liquidity factors. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on August 21, 2024.
Rizwan Enterprises (‘RE’ or ‘the Company’), registered as an Association of Persons (AOP) in 2001, is engaged in weaving, sizing and stitching operations, while fabric processing including bleaching and printing is outsourced to third-party vendors. The product portfolio comprises of greige fabric, finished fabrics and made-ups such as bedwear, pillow covers and curtains, mostly for export to Europe. The registered office and manufacturing facility are located in S.I.T.E, Karachi.
Pakistan’s textile sector, contributing ~55% of exports and 8.5% of GDP in 9MFY25, remains vital despite facing challenges. Domestic cotton production declined sharply, increasing reliance on imports, which also currently offer cost and quality benefits. Exports of textiles rose 7.9% YoY to USD 17.9 billion, driven by value-added segments. New policies though support local spinning however raise input costs for textile exports, which along with external pressures, including US tariffs are squeezing margins. However, firms investing in renewable energy and benefitting from rupee depreciation are better positioned to offset some of these challenges and maintain competitiveness.
The assigned ratings reflect the shift in sales mix during FY24 more towards local sales, which partially mitigated the adverse impact of the export market slowdown. Elevated energy costs leading to reduced profitability resulted in squeezing of margins, though liquidity remained satisfactory while debt coverage also remained comfortable. However, the weakening capital structure and higher short-term borrowings are noted, which led to a notable rise in gearing and leverage. The ratings remain sensitive to improvements in capitalization, with an emphasis on prudent management of partner drawings and recovery in equity. In FY25, performance improved on the back of export recovery and enhanced capacity utilization, supporting a rebound in gross and operating margins. Net margin, however, contracted primarily due to elevated finance costs and taxation. Going forward, ratings will remain sensitive to margin recovery, maintenance of liquidity and coverage metrics as well as the execution of expansion plans.
For further information on this ratings announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria: Corporates:
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf