Press Release

VIS Upgrades Entity Rating of Master Textile Mills Limited

Karachi, April 04, 2024: VIS Credit Rating Company Limited (VIS) has upgraded the entity ratings of Master Textile Mills Limited (‘MTML’ or ‘the Company’) to ‘A+/A-1’ (‘Single A Plus/A-One’) from ‘A/A-1’ (‘Single A/A-One’). Medium to long term rating of A+ indicates good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. Short term rating of ‘A-1’ indicates High certainty of timely payment; Liquidity factors are excellent and supported by good fundamental protection factors. Risk factors are minor. Outlook on the assigned ratings remains Stable. Previous Rating action was announced on November 04, 2022.

Established in 1992, Master Textile Mills Ltd. (‘MTML’ or ‘the Company’) is a vertically integrated textile composite engaged in the manufacturing and selling of yarn, griege cloth, dyed fabric, denim fabric and stitched garments. The head office and factory are situated at Manga Mandi, Lahore, Pakistan. MTML operates under the umbrella of Master Group of Industries, which has diversified presence across various business segments including foam and spring mattresses, engineering, automobiles, chemicals and energy sectors.

Assigned ratings incorporate the medium business risk profile of the textile sector in Pakistan, marked by exposure to economic cyclicality and intense competition. The sector's performance is notably 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 lengthy process of sales tax refunds. Supply-side risks, including local cotton crop production and reliance on imported raw materials, expose the sector to significant exchange rate risk.

Assigned ratings also consider the Company’s business updates wherein MTML demonstrated a consistent increase in topline during the last 4 fiscal years. The gross margin also registered consistent improvement as management continued to focus on enhancing operational efficiency. Consequently, profitability profile displayed improvement during the period under review.

Assigned ratings take into account the Company’s financial risk profile. Long term debt of the Company declined during the review period amid absence of any major capital expenditure. MTML has availed the arbitrage opportunity through short term investments by increasing the short term borrowing at lower rates. With higher internal cash generation, capitalization profile witnessed improvement in FY23 and 1QFY24. Ratings are also underpinned by adequate liquidity and sound cashflow coverage profiles with Debt Service Coverage Ratio (DSCR) remained above 4x during the last 3 fiscal years. Going forward, ratings remain sensitive to maintenance of profitability, capitalization and cash flow coverage indicators while further improvement in liquidity profile will also remain a key consideration.

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

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 2024 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .