Press Release

JCR-VIS Revises Sukuk Rating of Quetta Textile Mills Limited

Karachi, March 2, 2012: JCR-VIS Credit Rating Company Limited (JCR-VIS) has revised the Sukuk rating of Quetta Textile Mills Limited (QTML) to ‘BBB-’ (Triple B Minus) from ‘BBB+’ (Triple B Plus). Outlook on the rating has been revised from ‘Stable’ to ‘Negative’.

The textile industry has been faced with compressed margins since the last quarter of the out-going year. This has adversely affected the risk profile of highly leveraged companies. Furthermore, lack of gas availability in Punjab, where a majority of QTML’s plants are located, forced the company to run on furnace oil driving up production costs significantly. Even though QTML’s leverage has trended downwards relative to end-FY10, it is still considered high. Moreover, in the backdrop of compressed margins, the company’s liquidity position has weakened over time.

The rating action has been taken in view of the weakening in cash flows in recent periods, which has raised concerns regarding the company’s ability to service its debt in a timely manner. As inventory levels are generally at their peak at end-December 2011, debt levels are also higher at this point in time. It is expected that cash will be released in the coming months as inventory levels decline, which will release the stress on the company’s cash flow position. For the upcoming installment against the Sukuk issue at end-March 2012, the sponsors have reiterated their commitment to meet the amount due on time.

For further information on this rating announcement, please contact Ms. Sobia Maqbool, CFA (Ext: 506) or Mr. Javed Callea (Ext: 501) at 92-21-35311861-70 or fax to 92-21-35311873.

Jamal Abbas Zaidi
Deputy CEO

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 2012 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .