Press Release

JCR-VIS assigns preliminary rating of A- to proposed TFC of Sadaqat Textile Mills Pvt.Limited

Karachi, June 18, 2008: JCR-VIS Credit Rating Company Limited (JCR-VIS) has assigned a preliminary medium to long term rating of A- (Single A Minus) to the proposed TFC of Rs. 400 million to be issued by Sadaqat Textile Mills (Pvt.) Limited (STM). The preliminary Sukuk rating will be converted into final rating on review of signed legal documents. JCR-VIS has also assigned a medium-to-long-term entity rating of BBB+ (Triple B plus) and a short-term rating of A-3 (A Three) to STM. The outlook on the ratings is ‘Stable’.

The ratings take into account the strong financial performance of STM in the past few years during which the company has registered rapid growth in its revenue while maintaining high profitability margins and reasonable customer diversification. Consistent BMR over the past few years has led to expanded production capacity as well as upgraded production and finishing processes.

Going forward, even with projected increase in revenue, profitability may be stressed due to the current economic scenario with increasing production costs, upward revision of interest rates and the political instability in the country. This stress is somewhat mitigated with the company’s success in positioning itself as a quality exporter in the value added segment of the textile sector and development of strong customer relationships. Moreover, the implementation of the comprehensive ERP solution developed in-house should also result in significant improvement in the quality of management decision making.

For further information on this rating announcement, please contact Mr. Mustafa Ahmad (mustafa@jcrvis.com.pk) or Mr. Mansur Ali Shah (mansur@jcrvis.com.pk) at 021-5311861 or fax to 021-5311873.




Faheem Ahmad
President & 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 2008 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .