Press Release

VIS Assigns Initial Entity Ratings to Cotton Empire (Private) Limited

Karachi, December 31, 2021: VIS Credit Rating Company Limited has assigned initial entity ratings of ‘A-/A-2’ (A Minus/A-Two) to Cotton Empire (Private) Limited (CEPL). Long Term Rating of ‘A-’ reflects good credit quality with adequate protection factors. Risk factors may vary with possible changes in the economy. Short Term Rating of ‘A-2’ signifies good certainty of timely payment, sound liquidity factors and company fundamentals, and good access to capital markets. Risk factors are small. Outlook on the assigned ratings is ‘Stable’.

Incorporated in 2013 as a private limited Company, CEPL is engaged in production and sale of home textile products. Revenues are primarily export based offering variety of products in towels and fabrics which include wash cloth, bath and hand towels, bedsheets and many other allied products. At present, the manufacturing unit located in S.I.T.E Karachi, encompassing cutting, stitching and packing facility only while weaving facility is in the process of being set up in Nooriabad.

Assigned ratings take into account consistent growth in revenues, higher margins and sound cash flows. Profitability of the Company has grown over the years supported by strong margins led by operating efficiencies and low gearing structure. While client-wise concentration is on the higher side, ratings draw comfort from long-term relationships with major clients. Lack of business integration remains a constraint, however, the Company is pursuing backward integration into weaving which is expected to mitigate this risk. Liquidity profile remains sound while growth in earnings on a timeliness basis has enhanced cash flow coverages. Ratings also incorporate prudent capitalization policy of the Company, and while leverage indicators are expected to increase due to debt drawdown for ongoing CAPEX, it is projected to remain aligned with assigned ratings. Maintenance of capitalization indicators along with sustainability of margins is considered important for assigned level of ratings.


For further information on this rating announcement, please contact Ms. Sara Ahmed or the undersigned (Ext: 204) at (021) 35311861-66 or email at info@vis.com.pk





Faryal Ahmad Faheem
Deputy CEO

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

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2021 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .