Press Release

VIS Reaffirms Entity Rating of Naveena Exports Limited

Karachi, June 04, 2024: VIS Credit Rating Company Limited (VIS) has reaffirmed entity ratings of Naveena Exports Limited (NEL) at ‘A/A-1’ (Single A/A-One). Medium to long-term rating of ‘A’ reflects good credit quality and adequate protection factors. Risk factors may vary with possible changes in the economy. The Short-term rating of ‘A-1’ signifies high certainty of timely payment; liquidity factors are excellent and supported by good fundamental factors. Risk factors are minor. Outlook on the assigned ratings remains ‘Stable’. Previous rating action was announced on April 12, 2023.

Naveena Exports Limited (NEL), a subsidiary of Naveena Group (Private) Limited, began its journey in Pakistan in 1989 as a privately held entity, later transitioning to an unlisted public limited company in 2006. Specializing in yarn and denim fabric production and sales, NEL operates from its headquarters in Karachi, with manufacturing facilities located in Karachi and Lahore. Its manufacturing units include Naveena Denim Karachi, Naveena Denim Lahore, and Naveena Spinning Unit in Lahore.

Assigned ratings incorporate the medium business risk profile of the textile sector in Pakistan, marked by exposure to economic cyclicality and moderate competition. The sector's performance is influenced by broader economic conditions, rendering it susceptible to demand fluctuations driven by economic factors. Furthermore, as a substantial contributor to total exports, the textile industry faces exposure to global economic cyclicality, geopolitical challenges, and liquidity constraints due to time involved in sales tax refunds. Supply-side risks, including local cotton crop production and reliance on imported raw materials, expose the sector to exchange rate risk.

Assigned ratings take into account the Company’s business updates; In FY23, Naveena Exports Limited (NEL) experienced growth in sales driven by increased yarn sales, while demand for denim declined. Overall, topline growth of the Company has outperformed its peer average for the same period. Export sales, including direct and indirect exports, contributed to above 95% of the total sales in FY23. However, the Company's profit margins slightly decreased due to rising energy costs and higher finance costs. Despite ongoing cost pressures, NEL anticipates a rebound in denim sales, aiming to maintain profitability.

The assigned ratings also account for the Company’s financial risk profile. In FY23, NEL experienced a slight decline in profitability indicators due to which the Debt Service Coverage Ratio (DSCR) witnessed a decrease. However, the DSCR remained adequate from the ratings perspective. NEL maintained a current ratio of 1.5x as of June 2023. Regarding capitalization indicators, the Company's gearing position remained stable, while leverage stayed within manageable levels. Going forward, improvement in debt service coverage will be important in order to maintain given ratings.

For further information on this ratings announcement, please contact at 021-35311861-64 or email at

Applicable Rating Criteria: Corporates:

VIS Issue/Issuer Rating Scale:

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