Press Release

VIS Credit Rating Company Maintains Entity Ratings of Al-Karam Textile Mills (Private) Limited

Karachi, May 30, 2022: VIS Credit Rating Company Limited (VIS) has maintained the entity ratings of Al- Karam Textile Mills (Private) Limited at ‘A/A-2’ (Single A/A-Two). Outlook on the assigned ratings has been revised from ‘Stable’ to ‘Negative’. Long Term Rating of ‘A’ reflects good credit quality with adequate protection factors. 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. The previous rating action was announced on March 04, 2021.

Incorporated in 1986 as a private limited company, AKTMPL is principally engaged in manufacturing and sale of textile products. It is a vertically integrated company with diverse product portfolio including a variety of yarn ranging from coarse to fine counts, home textiles, institutional textiles and garments. Manufacturing facility of the Company is situated in Landhi Industrial Area.

Revision in outlook reflects elevated debt levels in relation to equity base on a timeline basis along with pressure on projected cash flow coverages. Financial assessment of FY21 takes note of improvement in capacity utilization levels and healthy growth in topline of the Company. Revenue growth has been driven by increase in average selling price as well as growth in volumes. Management expects the same to continue, going forward, given sufficient export order book. Margins, however, remained under pressure due to higher raw material prices and disruptions in supply chain. Nevertheless, bottom line profitability was higher supported by one-off gains.

Ratings remain sensitive to higher gearing and leverage levels which continue to be a drag on profitability; more so in a rising interest rate environment. Liquidity profile of the Company is considered adequate however expected to remain under pressure amidst expansionary phase. Achievement of projected profitability along with improvement in margins, together with improvement in capitalization indicators and liquidity profile will remain important for ratings, going forward.

For further information on this rating announcement, please contact Ms. Asfia Aziz or the undersigned (Ext. 201) at 021-35311861-70 or email at info@vis.com.pk.




Javed Callea
Advisor

Applicable Rating Criteria: Corporates (August 2021)
https://docs.vis.com.pk/docs/CorporateMethodology202108.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 2022 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .