Press Release

VIS Assigns Initial Ratings to Arshad Textile Mills Limited

Karachi, April 03, 2019: VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘BB+/A-3’ (Double B Plus/A-Three) to Arshad Textile Mills Limited (ATML). The medium to long-term rating of ‘BB+’ denotes that obligations deemed likely to be met. Protection factors are capable of weakening if changes occur in the economy. Overall quality may move up or down frequently within this category. The short-term rating of ‘A-3’ denotes timely payment of obligations coupled with satisfactory company fundamental and liquidity factors. Outlook on the assigned ratings is ‘Stable’.

ATML is a small-scale spinning unit involved in the manufacturing and sale of cotton-blended yarn. ATML is a part of Arshad Group and shareholding is vested with sponsoring family who are actively involved in the day-to-day operations. The assigned ratings take into account relevant experience of the sponsors, established business relations with suppliers and customers, sustained top-line growth and some improvement in profit margins. The business risk profile draws some comfort from recent Balancing, Modernization, and Replacement (BMR) of existing spinning unit and diversification into finished fabric and service uniform business. Although ATML has been able to improve its competitiveness, the ratings are constrained by limited scale of spinning operations and susceptibility of margins to volatile cotton prices.

For further information on this rating announcement, please contact undersigned or Mr. Maimoon Rasheed at 021-35311861-70/042-35723411 or fax to 021-35311872-3.


Javed Callea
Advisor

VIS Entity Rating Criteria Industrial Corporate (May 2016)
https://www.vis.com.pk/kc-meth.aspx

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