Press Release

VIS Maintains Entity Ratings of Shahbaz Garments (Private) Limited (SGL) with ‘Rating Watch-Negative’ Status

Karachi, April 30, 2020: VIS Credit Rating Company Limited (VIS), while maintaining the entity rating of ‘BBB+/A-2’ (Triple B Plus/A-Two) assigned to Shahbaz Garments (Private) Limited (SGL), 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 May 2, 2019.

Shahbaz Garments (Private) Limited (SGL) is engaged in manufacturing and sale of various types of industrial gloves, along with fabric and yarn. The parent group also owns five other companies in Pakistan including Beltexco Limited (BEL), Prime Safety Limited (PSL), Midas Clothing Limited (MCL), Industrial Clothing Limited (ICL), and Work Clothing Limited (WCL). The registered office of SGL is based in Karachi. The company has three manufacturing units, out of which two units are based in Faisalabad, while one unit is based in S.I.T.E Karachi.

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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