Press Release
VIS Reaffirms Entity Ratings of Best Fibres (Pvt.) Limited
Karachi, May 06, 2025: VIS Credit Rating Company Limited (VIS) reaffirms entity ratings of Best Fibres (Pvt.) Limited (“BFPL” or “the Company”) at 'A-/A2' (Single A minus/A Two). Medium to long term rating of 'A-' indicates good credit quality; Protection factors are adequate. Risk factors may vary with possible changes in the economy. Short term rating of 'A2' indicates a good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. The outlook on the assigned ratings remains “Positive”. Previous rating action was announced on May 14, 2024.
BFPL was incorporated as a private limited company in Pakistan in 2017. The principal activity of the Company is production and sale of yarn made from viscose staple fiber and cotton mainly for local markets.
Assigned ratings incorporate the business risk profile of Pakistan’s textile spinning sector, which remains influenced by demand cyclicality, competitive pressures, regulatory challenges, and energy sensitivity. The sector serves as a critical upstream segment in the textile value chain, with performance closely linked to broader economic conditions. Cotton production remained below domestic demand requirements despite a marginal improvement in cultivation area, as shifting preferences among farmers toward higher margin crops limited recovery. Export volumes saw limited growth, with changes in global procurement patterns and political uncertainty contributing to the diversion of export orders to regional competitors. However, the impact on the Company’s sales remained contained due to product focus on coarse yarn, which continued to find demand. The withdrawal of the Export Facilitation Scheme and transition from the Final Tax Regime to the Normal Tax Regime have reduced cost competitiveness of locally produced yarn. Regional competition continues to pose structural challenges, with limited product diversification constraining market capture. Energy tariffs and regulatory changes have added to operating cost pressures, while high energy costs and rising wages have further compressed margins.
Assigned ratings incorporate the Company’s financial risk profile. Profitability remained constrained during the review period due to elevated input costs and limited pricing flexibility, resulting in decline in gross margins, while net margins remained stable due to low finance costs. Capitalization reflected increased reliance on short-term borrowings in FY24, though deleveraging in 1HFY25 led to a notable reduction in gearing and leverage. Liquidity remained adequate, with partial recovery in the current ratio. Coverage metrics also remained stable, supported by lower financial obligations following debt reduction. Positive Outlook reflects sustained performance across key financial indicators, underpinned by cautious debt management, limited capital expenditure, and improved working capital controls in a challenging operating environment.
Going forward, the ratings will remain sensitive to developments in the regulatory environment, shifts in global demand, and the Company’s ability to sustain its profitability and liquidity metrics under prevailing sector dynamics. Continued maintenance of a conservative capital structure, effective working capital management, and cost controls will be essential to preserve the current rating level.
For further information on this rating announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria:
Industrial Corporates
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf