Press Release

VIS Reaffirms Entity Ratings of Rizwan Enterprises

Karachi, May 29, 2023: VIS Credit Rating Company Limited (VIS) has reaffirmed entity ratings of Rizwan Enterprises (RE) at ‘A-/A-1’ (Single A Minus/A-One). Medium to 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-1’ indicates high certainty of timely payment, liquidity factors are excellent and supported by good fundamental factors. Risk factors are minor. Outlook on the assigned ratings remains ‘Stable’. Previous rating action was announced on May 17, 2022.

Ratings factor in the company’s four-decade history of fabric and made-ups production, focus on capacity enhancement, strong export orientation, and recent shift in yarn purchases from international to domestic sources in view of import crisis in the country. Ratings reaffirmation reflect strong revenue growth, consistent upward trend in capitalization driven by healthy profit retention, favorable leverage metrics compared to peers, and satisfactory cash conversion cycle and liquidity profile. However, profit margins noted a contraction in the current fiscal year due to a global demand slowdown impacting sales volume and higher expenses for raw materials, salaries, and power. Business risk profile takes into account industry wide growth in exports over the last year; however, recent floods across the country, high interest rate situation, inflationary pressures, higher electricity costs and demand slow down pose risks on the sector over the medium term. Ratings are constrained by current weak macroeconomic environment globally and locally.

Over 90% of revenue comes from exports of greige fabric, hospitality and home use fabric and made-ups, with only greige fabric being sold locally. Product-wise, griege fabric constitutes over three-fourth of the total sales, with finished fabric and made-ups making up the rest. Europe remains the primary export market, with Germany, Portugal, and Italy being the major destinations while client concentration is on the higher side. Since last review, the company added 34 new looms and replaced 40 shuttle-less looms with modern air-jet picanol ones. Project cost stood at Rs. 420m and was financed through a mix of an LTFF facility and internal cash flows. Management has expressed interest in setting up a spinning facility in the future for vertical integration, and has already acquired a 10-acre land in Nooriabad for this purpose. Going forward, improvement in financial performance metrics specifically margins is important for sustenance of ratings.

For further information on this rating announcement, please contact Mr. Muhammad Tabish (Ext: 206) or the undersigned (Ext: 207) at (021) 35311861-4 or email at

Sara Ahmed

Applicable Rating Criteria: Industrial Corporates (May 2023)

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