Press Release

VIS Reaffirms Entity Ratings of Asher Imran Spinning Mills (Pvt.) Limited

Karachi, December 30, 2024: VIS Credit Rating Company Limited (“VIS”) has reaffirmed the entity ratings of Asher Imran Spinning Mills (Pvt.) Limited (“AISML” or “the Company”) at ‘A-/A2’ (Single A minus/A Two). 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' suggests good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Outlook on the assigned ratings remains ‘Stable’. Previous ratings action was announced on November 20, 2023.

AISML, incorporated in 2000 and operational since 2002, manufactures and sells yarn. A wholly owned subsidiary of Comfort Knitwears (Pvt.) Limited, AISML’s registered office is in Lahore with a spinning unit in Kasur. It is a part of Comfort Group, which includes Zulfikar Knitting & Processing Mills, Comfort Yarn Dyeing and Surgical Cotton Mills in the textile sector; Frontier Dextose, Curatech Pharma belonging to the pharmaceutical sector and ZAR Motors operating in the transportation sector.

Assigned ratings consider the high-to-medium business risk profile of Pakistan's textile spinning sector. This evaluation considers demand-side challenges and supply-side constraints, including raw material availability, energy shortages, and evolving regulatory policies. While domestic cotton production increased in FY24, reducing reliance on imports, elevated energy tariffs have significantly impacted operational costs. The sector also contends with competitive pressures from regional peers and macroeconomic challenges domestically, such as currency depreciation and high inflation. Regulatory inconsistencies, particularly the removal of preferential energy tariffs for export-oriented sectors, have introduced additional risks. Additionally, client concentration risk is high, with a notable share of sales derived from a limited number of customers. However, operational, managerial, and financial support from the sponsors, who have an extensive experience and strong business linkages, provides stability to the assigned ratings.

Assigned ratings also consider the financial risk profile of the Company reflected as improvement in profitability. Gross margins improvement, supported by a favorable product mix and stable exchange rates, contributed to profitability gains, though these were partially offset by elevated financial costs. Capitalization metrics have strengthened due to reduced debt utilization, timely debt repayments, and profit retention. The liquidity profile has improved, with sufficient cash flows generated to meet working capital requirements, reducing reliance on short-term borrowings. Coverage metrics also reflect improvement, driven by enhanced debt service capacity and reduction in debt obligations.

Going forward, the assigned ratings will remain sensitive to the Company’s ability to manage client concentration risk and address competitive and regulatory challenges. Improvement in energy cost management will also be important to maintaining profitability. The ratings will further depend on the Company’s ability to maintain improvements in capitalization, coverage, and liquidity metrics.

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

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