Press Release

JCR-VIS Assigns Initial Ratings to Best Exports (Pvt.) Limited

Karachi, November 5, 2018: JCR-VIS Credit Rating Company Limited (JCR-VIS) has assigned initial entity ratings of ‘BBB/A-2’ (Triple B/A-Two) to Best Exports (Pvt.) Limited (BEL). The medium to long-term rating of ‘BBB’ denotes adequate credit quality coupled with reasonable and sufficient protection factors. Moreover, risk factors are considered variable with possible changes in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments. Liquidity factors and company fundamentals are considered sound and risk factors considered small. Outlook on the assigned ratings is ‘Stable’.

BEL is a medium sized export-oriented weaving and made-ups unit located in Faisalabad. Shareholding of the company is vested with Mr. Waqas Ali who assumed full control of the company after its spin-off from spinning business. Product portfolio of BEL mainly comprises grey & dyed/printed fabric and made-ups. Made-ups including bed sets, pillow covers, quilt covers, cotton bags, table covers and curtains accounted for more than half of export sales in FY18. While the company has been able to tap various export avenues in order to rationalize geographical concentration, Europe has remained a primary market for export sales over the years. Customer concentration remains a risk for the company

The ratings take into account BEL’s presence in export oriented value-added textile segment and experienced management team. However, ratings are constraint by limited scale of operations and margins coupled with old plant and machinery leading to efficiency challenges amidst stiff competition. The management’s prudent expansion strategy while maintaining a low leverage capital structure and adequate debt service coverage are among the positive rating drivers.

Given the low funds from operations and high cash conversion cycle, the company is primarily managing its working capital requirement through short-term borrowings. Currently, there is no long term debt on books; the management is considering to mobilize long-term finances to partly fund a vertical integration project in FY20 that is currently being evaluated. The project is planned to be financed through a combination of long term debt and equity. Going forward, leverage indicators may increase, though gearing is projected to remain low. The ratings remain dependent on sales and margin growth while maintaining adequate debt service coverage and a low leverage capital structure.

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

Javed Callea

Applicable rating criterion: Industrial Corporate (May, 2016)

Information herein was obtained from sources believed to be accurate and reliable; however, JCR-VIS Credit Rating Company Limited JCR-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.JCR-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.JCR-VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings.JCR-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 2018 JCR-VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to JCR-VIS.

JCR-VIS Credit Rating Company Limited