Press Release

VIS Reaffirms the Entity Ratings of Crescent Bahuman Limited

Karachi, May 13, 2022: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Crescent Bahuman Limited (CBL) at ‘A-/A-2’ (Single A Minus/A-Two). The medium to long-term rating of ‘A-’ signifies good credit quality with adequate protection factors. Moreover, risk factors may vary with possible changes in economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments coupled with sound liquidity and company fundamentals. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on June 11, 2021.

CBL is an export-oriented, vertically integrated denim fabric and garment manufacturing company. CBL was established as a joint venture between the Crescent Group and Greenwood Mills - U.S-based fabric manufacturing company - in 1993, however, in 2001 after extensive restructuring, Crescent group took over full ownership of the company. Shareholding of the Company is mainly vested with the members of sponsoring family, associated companies, and International Finance Corporation.

Assigned ratings take into account moderate risk profile of the Company, underpinned by highly experienced sponsors and senior management, vertically integrated denim jeans production capabilities, high-end pricing, controlled freight costs in times of global supply chain disruption, and continued investment in automation for efficiency enhancement. Further enhancement of manufacturing facilities primarily focusing on enhancing garment manufacturing capacity is underway. During the year, revenue growth has regained momentum after pandemic-led slowdown, in terms both value and volume; however, remain subdued on account of rising raw material prices. Enhanced cash flow generation strengthened the liquidity position. Gearing and debt leverage continue to improve with support from equity injection and retention of profits to fund capital expenditures. Management believes that with higher projected profitability, balance sheet will be further de-leveraged, consequently improving the capitalization indicators. Going forward, sustainability of topline growth and improvement in margins while maintaining leverage indicators low will remain important for ratings.

For further information on this rating announcement, please contact Ms. Sara Ahmed at 021-35311861-70 or email at info@vis.com.pk

Sara Ahmed
Director

Applicable Rating Criteria: Corporates (Aug 2021)
https://docs.vis.com.pk/docs/CorporateMethodology202108.pdf

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