Press Release

VIS Withdraws Instument Rating of Treet Corporation Limited

Karachi, October 06, 2020: VIS Credit Rating Company Limited (VIS) has revised the entity ratings of Treet Corporation Limited (TCL) from ‘A/A-2’ (Single A/A-Two) to ‘A-/A-2’ (Single A Minus/A-Two). The medium to long-term rating of ‘A-’ denotes good credit quality coupled with adequate protection factors. Moreover, risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payment coupled with sound company fundamentals and liquidity factors. VIS has withdrawn the preliminary rating of TCL’s proposed sukuk, with immediate effect, on account of shelving of instrument. The previous rating action was announced on September 24, 2019.

The ratings incorporate TCL’s strong sponsorship profile and diversified revenue stream owing to presence in different product segments. Financial risk profile of the company has weakened on account of sizeable losses accumulated over the last three years. Some improvement has been witnessed in operating profits during 9MFY20 on the back of cost control measures and lower negative contribution of the battery segment to company’s margins. However, bottom line continued to remain suppressed mainly due to higher financial charges. The same has impacted liquidity profile and risk absorption capacity. Leverage indicators remained weak owing to declining core equity and persistently higher short-term borrowings.

In order to reduce debt levels and restore profitability, the management plans to sell non-core assets and utilize the interest savings achieved from lower borrowings and markup rate during the ongoing year. Capital structure will also be supported by fresh equity injection intended for the Battery segment. Ratings will remain dependent on materialization of aforementioned objectives over reasonable timeframe as projected by the management. Given prevailing uncertainty, the ratings have been placed on ‘Rating-Watch Developing’ status.

For further information on this rating announcement, please contact Ms. Tayyaba Ijaz at 042-35723411-13 (Ext. 8004) and/or the undersigned at 021-35311861-66 (Ext. 306) or email at info@vis.com.pk



Faryal Ahmad Faheem
Deputy CEO


Applicable rating criterion: Corporates (May 2019)

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