Press Release

VIS Maintains Entity Rating of Union Apparel (Private) Limited

Karachi, March 20, 2025: VIS Credit Rating Company Limited (VIS) has maintained the entity ratings of Union Apparel (Private) Limited (‘UAPL’ or the ‘Company’) at ‘A-/A2’ (Single A minus/ A two). The ratings have been placed on ‘Rating Watch – Developing’ status. 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 'A2' indicates Good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Previous Rating action was announced on March 04, 2024.

Incorporated in 2016, Union Apparel (Pvt) Limited is a wholly owned subsidiary of Union Fabrics (Pvt) Limited, engaged in manufacturing and sale of fabric and finished goods, including printed and embroidered ready-to-stitch fabric. The Company operates as a one-window solution to the leading brands in the local retail market. The company’s business risk profile is driven by reduced purchasing power of consumers and a growing price differential between formal and informal retail sectors. As a result, the branded segment is expected to experience slower growth in near future.

During the year, the Company has reported an approximately 50% growth in topline, driven by enhanced client concentration. Profit margins strengthened as global yarn prices declined, leading to improved liquidity and coverage indicators. However, slow recovery cycles in retail segment have kept the Company’s cash conversion cycle prolonged. Capitalization indicators including leverage profile remained elevated due to increased utilization of short-term borrowings.

The revision in ratings outlook to ‘Rating Watch – Developing’ status is on the account of Company’s ongoing plans to merge with and into its parent company Union Fabrics (Pvt) Ltd, with Union Fabrics (Pvt) Ltd being the surviving entity. The consolidation is expected to take effect from the FY25 results, as NOCs have been obtained from all relevant lenders to proceed with Amalgamation and a petition has been filed with the High Court of Sindh. Therefore, the assigned ratings will need to be reassessed upon the successful completion of planned merger.

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




Applicable Rating Criteria:

Industrial Corporates
https://docs.vis.com.pk/docs/CorporateMethodology.pdf

VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.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 2025 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .