Press Release

VIS Maintains Entity Ratings of Naveena Industries Limited (NIL) with ‘Rating Watch-Negative’ Status

Karachi, April 24, 2020: VIS Credit Rating Company Limited (VIS), while maintaining the entity rating of ‘BBB+/A-2’ (Triple B Plus/A-Two) assigned to Naveena Industries Limited (NIL) has placed the same on ‘Rating Watch - Negative’ status. Long Term Rating of BBB+ reflects adequate credit quality; protection factors are reasonable and sufficient. Risk factors are considered variable if changes occur in the economy. Short Term Rating of A-2 indicates good certainty of timely payment. Liquidity factors and company fundamentals are sound. Access to capital markets is good. Risk factors are small. The previous rating action was announced on February 28, 2020.

The principal business of Naveena Industries Limited (NIL) includes manufacturing and export of grey cloth. NIL started commercial operations in 1966 as an embroidery unit (and later weaving) of Naveena Group which is involved in the business of spinning and weaving. The group also owns Ahmed Oriental Textile Mills Limited, which is engaged in production of yarn. NIL’s production facilities are located at F-130, SITE, Karachi and Mauza Kot, Kamoon Shah, Tehsil and District, Rahim Yar Khan. At present, the company operates a mix of airjet and shuttleless looms.

The revision in rating outlook reflects prevailing uncertainty in textile sector dynamics due to coronavirus outbreak, prolonged lockdown, overall contraction in demand, sharp fall in cotton prices and challenging economic environment. It is expected that the entire value chain of the textile industry will be impacted by these developments. Status of the assigned rating is therefore uncertain as an event of deviation from expected trend has occurred; additional information will be necessary to take any further rating action. Aforementioned operating dynamics coupled with leveraged capital structure of the company warrant a ‘Rating Watch-Negative’ status. The ratings are dependent upon maintenance of overall sales, profit margins, debt service coverage, and gearing ratios at an adequate level, with outlook subject to be reviewed once the situation stabilizes.

For further information on this rating announcement, please contact Mr. Narendar Shankar Lal (Ext: 203) or the undersigned (Ext. 306) at 021-35311861-70 or email at info@vis.com.pk.


Faryal Ahmad Faheem
Deputy CEO

Applicable Rating Criteria: Industrial Corporates (April 2019)
https://s3-us-west-2.amazonaws.com/backupsqlvis/docs/Corporate-Methodology-201904.pdf

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