Press Release

VIS Reaffirms Entity Ratings of Zephyr Textile Limited

Karachi, November 17, 2023: VIS Credit Rating Company Limited (VIS) has reaffirmed entity ratings of Zephyr Textile Limited (‘ZTL’ or ‘the Company’) at ‘BBB+/A-2’ (Triple B Plus/A-Two). The medium to long-term rating of ‘BBB+’ denotes adequate credit quality coupled with reasonable and sufficient protection factors. Moreover, risk factors are considered variable if changes occur in the 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 ‘Positive’. The previous rating action was announced on August 30, 2022.

ZTL is a public listed company involved in fabric weaving, towel weaving and finishing, complemented by dyeing and processing unit. Business risk environment of the local textile sector remain elevated amid weak macro-economic environment, high interest rates, inflationary pressures, rising raw material cost, on-going energy crisis and a global slump in demand. Resultantly, Pakistan’s textile exports witnessed a 10% Y/Y decline to USD 16.7b (FY22: 18.5b).

The assigned ratings of ZTL take into account a fairly diversified revenue stream, both in terms of product profile and geographical footprint wherein the export ratio in sales has increased to 65:35, which historically remained at 50:50. Moreover, the management of ZTL has decided to develop a garments (finished products) unit in order to move towards value addition and larger exports. Thus, enabling the Company to keep its moderate growth given a challenging environment in the industry.

Ratings are underpinned by improvement in overall profitability. Assigned ratings further draw support from conservative financial risk profile with moderately leveraged capital structure, manageable liquidity profile and adequate cash flow coverages. Going forward, the ratings are dependent on maintenance of gearing, incremental cash flow generation from upcoming garments segment and improvement in liquidity indicators.

For further information on this rating announcement, please contact Mr. Amin Hamdani (Ext: 217) or the undersigned (Ext. 207) at 021-35311861-70 or email at

Sara Ahmed

Applicable Rating Criteria: Industrial Corporates (May 2023)

VIS Issue/Issuer Rating Scale

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