Press Release

JCR-VIS Assigns Initial Entity Ratings to Riaz Textile Mills (Pvt.) Limited

Karachi, December 31, 2018: JCR-VIS Credit Rating Company Limited (JCR-VIS) has assigned initial entity ratings of ‘A/A-1’ (Single A /A-One) to Riaz Textile Mills (Pvt.) Limited (RTML). The medium to long-term rating of ‘A’ denotes good credit quality coupled with adequate protection factors. Moreover, risk factors may vary with possible changes in the economy. The short-term rating of ‘A-1’ denotes high certainty of timely payment, liquidity factors are excellent and supported by good fundamental protection factors. Outlook on the assigned ratings is ‘Stable’.

RTML is amongst the large spinning units operating in Pakistan. Shareholding of the company is vested with the sponsoring family who is actively involved in the day to day affairs of the company. Recent enhancement in production capacity owing to the completion of third spinning unit is expected to boost RTML’s competiveness and sales, which, in turn, is expected to positively impact the overall profitability and cash flow generation. The company’s newly established spinning unit - III commenced commercial production in January 2018. Being primarily an export oriented company, recent rupee devaluation also bodes well for the profitability.

The company’s policy of meeting working capital requirements from internal cash generation reflects positively on the liquidity profile. The ratings also take into account low leveraged capital structure and sound liquidity profile. Ratings are constrained by vulnerability of the spinning sector to raw material prices, adverse changes in the regulatory duties structure, and high geographic concentration. Corporate governance framework has room for improvement.

For further information on this rating announcement, please contact the undersigned at 021-35311861-70 or Mr. Maimoon Rasheed at 042-35723411-13.


Jamal Abbas Zaidi
Advisor

Applicable rating criterion: Industrial Corporate (May, 2016)
http://jcrvis.com.pk/docs/Corporate-Methodology-201605.pdf

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