Press Release

VIS Maintains Entity Rating of Union Fabrics (Private) Limited

Karachi, March 20, 2025: VIS Credit Rating Company Limited (VIS) has maintained the entity ratings of Union Fabrics (Private) Limited (‘UFPL’ 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 February 29, 2024.

Commenced in 1992 as a small-scale weaving unit, Union Fabrics (Pvt) Limited is currently operating as a leading exporter of high-quality home textile fabrics and made-ups, mainly to Europe and US. During the outgoing financial year, capacity utilization has remained on the higher side with demand rebounding upon recovery in European export markets post Russia-Ukraine war. Consequently, Company has reported high sales growth during the period. While the debt coverage ratios have remained adequate, high leverage indicators continue to constrain assigned ratings. Additionally, there remains room for improvement in the Company’s current governance structure.

The revision in ratings outlook to ‘Rating Watch – Developing’ status is on the account of Company’s ongoing plans to merge its wholly owned subsidiary ‘Union Apparel (Pvt) Ltd’ with and into UFPL, with UFPL 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 .