Press Release

VIS assigns initial Entity Ratings to Saya Weaving Mills Limited

Karachi, January 10, 2022: VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘A-/A-2’ (Single A Minus/A-Two) to Saya Weaving Mills Limited (SWML). Long term entity rating of ‘A-’ reflects good credit quality, adequate protection factors. Risk factors may vary with possible changes in the economy. Short Term Rating of ‘A-2’ indicates good certainty of timely payment, with sound liquidity factors, supported by good fundamentals of the company. Outlook on the rating has been assigned as ‘Stable’.

Incorporated in 1987, SWML possesses more than three decades of experience in textile business and is primarily involved in the manufacturing of greige and finished fabrics, home textiles and apparel. SWML is a family owned business with shareholding vested among members of the immediate family. Along with textiles, the group has exposure in FMCG distribution and commodity trading.
The assigned ratings incorporate the extensive experience of SWML in weaving business supported by the positive outlook of the industry over the rating horizon. Ratings also incorporate the established business profile and growth in revenues and profitability of the company. During FY21, sales witnessed a sharp increase, in line with the market trend, owing to an increased demand after COVID-induced lockdowns. As a result, capacity utilization increased. Local sales account for majority of the sales revenue with grey fabric dominating the product mix. Ratings also take into account capex initiatives aimed at improving efficiencies and margins. Addition of new weaving capacities and set up of a processing and spinning facility by 2023 to make SWML a fully vertically integrated textile unit is underway. Materialization of expansion plans and sustainability of growth momentum will be important.

Assessment of financial profile indicates growth in equity base on account of profit retention. Gearing level account for mainly related party loans and remain favorable, although they are expected to increase going forward on account of capex funding. Leverage depicts an increase on a timeline basis. Liquidity profile of the company is considered adequate in view of satisfactory cash flows in relation to outstanding obligations. Extending the term on related party loans improves the asset-liability maturity match on the balance sheet, consequently improving current ratio. Improvement in margins and profitability levels together with maintenance of capitalization indicators will be important for ratings, going forward.

For further information on this rating announcement, please contact Ms. Sara Ahmed (Ext: 207) or the undersigned (Ext. 306) at 021-35311861-70 or email at info@vis.com.pk mailto:info@vis.com.pk.



Faryal Ahmad Faheem
Deputy CEO

Applicable Rating Criteria: Industrial Corporates (August 2021)
https://docs.vis.com.pk/docs/CorporateMethodology202108.pdf

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