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

Applicable rating criterion: Industrial Corporate (May, 2016)

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 not an NRSRO and its credit ratings are not NRSRO credit ratings.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 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.

JCR-VIS Credit Rating Company Limited