Press Release

VIS Credit Rating Maintains Entity Ratings of Bhimra Textile Mills Limited

Karachi, December 29, 2022: VIS Credit Rating Company Limited (VIS) has maintained the entity ratings of Bhimra Textile Mills Limited (BTML) at ‘BBB/A-2’ (Triple B/A-Two). The medium to long term rating of ‘BBB’ signifies adequate credit quality, protection factors are reasonable and sufficient. Risk factors are considered variable if change occur in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payment. Liquidity factors and company fundamentals are sound. Access to capital markets is good. Risk factors are small. Outlook on the assigned ratings has been revised from ‘Stable’ to ‘Negative’. The previous rating was announced on December 31, 2021.

BTML is a spinning company with main shareholding vested with the sponsoring family. The assigned ratings factor in high cyclicality and competitive intensity for spinning segment along with volatility in cotton prices which translate into moderate to high business risk profile. Revision in outlook factors in elevated business risk profile as recent floods across the country, rising interest rates, inflationary pressures, and higher electricity costs pose risks for the sector over the medium term. Ratings are constrained by current weak macroeconomic environment globally and locally. In FY22, BTML’s revenue base depicted improvement resulting in enhancement of liquidity profile. Moreover, while expansion of current operations with addition of 16,800 spindles is expected to bode well for the company in the long-term in terms of reaping economies of scale, the same remains vulnerable to stabilization in global and domestic demand outlook. The leverage indicators have increased on account of higher borrowings to fund capital expenditure and increasing working capital requirements. In addition, the ratings remain sensitive to lack of revenue diversification and limited scale of operations. Hence, meeting projected growth targets and maintaining financial risk profile will remain imperative for ratings, going forward.

For further information on this rating announcement, please contact Ms. Maham Qasim (042-35723411-13, Ext. 8010) and/or the undersigned at 021-35311861-66 (Ext. 207) or email at info@vis.com.pk.

Sara Ahmad
Director

Applicable rating criterion: 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 .