Press Release

VIS Reaffirms Entity Ratings of Zaman Textile Mills (Private) Limited

Karachi, March 14, 2024: VIS Credit Rating Company Limited (‘VIS’) reaffirms Entity Ratings of Zaman Textile Mills (Private) Limited (‘ZTML’ or ‘the Company’) at 'A-/A-2' (‘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 'A-2' indicates good certainty of timely payment. Liquidity factors and company fundamentals are sound. Access to capital markets is good. Risk factors are small. Outlook on the assigned ratings remains ‘Stable’. Previous Rating action was announced on March 07, 2023.

Zaman Textile Mills (Private) Limited was incorporated in Pakistan in 1969 as a public company limited by shares. The Company changed its status to a Private Company in 2016. Principal activity of ZTML is manufacturing, processing, dyeing, sale and trading of yarn and dyed fabrics. The registered office of the Company is situated in Korangi Industrial Area, Karachi. The manufacturing facility of yarn is located at Kotri Industrial Area whereas fabric and dyeing facilities are located at Landhi Industrial Area, Karachi.

Assigned ratings incorporate elevated business risk in the textile sector, stemming from a weak macroeconomic environment, high-interest rates, inflationary pressures, escalating raw material costs, ongoing energy crisis, and a global demand slump. Despite the industry's historical significance, these factors pose challenges to margin sustainability and future growth.

Assigned ratings also consider the financial risk profile of the Company. ZTML reported improved topline and operational margins in FY23 and 1HFY24, driven by increased revenue from the weaving segment and inventory gains, despite strong headwinds during the review period. The capitalization profile has remained elevated due to higher debt utilization during FY23, however, continued sponsor support and improved operational cashflows provide comfort to assigned ratings. The coverage profile, despite deterioration from exacerbating financial burden during the period, remains healthy. The liquidity profile also remains adequate with respect to assigned ratings.

Going forward, ratings will remain sensitive to the Company’s ability to maintain its profitability, capitalization, coverage, and liquidity profiles commensurate with assigned ratings. Moreover, continued sponsor support will also be an important consideration for future reviews.

For further information on this rating 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

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 2024 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .