Press Release

VIS Assigns Final Rating to the Sukuk of Al-Karam Textile Mills (Private) Limited

Karachi, August 27, 2024: VIS has assigned final rating of ‘A’ (Single A) to Al-Karam Textile Mills’s (AKTM) Medium Term Sukuk (MTS) issue with a financial close of Rs. 2.2b on August 15, 2024. Medium term rating of A reflects good credit quality; Protection factors are adequate. Risk factors may vary with possible changes in the economy. Entity ratings of AKTM stands at ‘A/A-2’ (Single A/ A-Two). Outlook on the assigned rating is “Stable”. Previous preliminary rating action for the Sukuk was announced on April 04, 2024.

AKTM is part of Al-Karam Group, is a vertically integrated textile setup with operational history of nearly four decades. Product portfolio includes a variety of yarns ranging from coarse to fine counts, fabric, home textiles, institutional textiles and garments. AKTM also has a retail arm namely Alkaram Studio, which was founded in 2010 and has since become a prominent local brand, with 62 retail outlets spread nationwide.

AKTM has issued a medium-term, secured, privately placed Sukuk to eligible investors amounting to Rs. 2.2b on August 15, 2024. The Issue will be utilized by AKTM to meet working capital requirements mainly of its newly established Nooriabad spinning plant. The instrument has a tenor of three years starting from the issue date. The first redemption shall fall due at the end of three (3) months period falling immediately after the first drawdown. The instrument carries pricing of 3M KIBOR+1.50%.The security structure of the instrument is a mortgage by deposit of title deeds over the Mortgaged Property in favor of the Investment Agent.

Assessment of financial position of the Company reflects revenue growth attributed to recovery in demand and increased proportion of local sales in FY24. Gross margins remained intact during the period under review, however, net margins remained under pressure. The same are expected to rebound amid expected decline in interest rates. Liquidity and cashflow indicators remained intact with adequate debt service coverage.

For further information on this ratings announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.

Applicable Rating Criteria: Corporates:
https://docs.vis.com.pk/docs/CorporateMethodology.pdf

VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf

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