Press Release

JCR-VIS Assigns Initial Entity Ratings to Metco Textile (Pvt) Limited

Karachi, February 08, 2019: JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has assigned initial entity ratings of ‘A-/A-2’ (A Minus/A-Two) to Metco Textile (Pvt) Limited (MTL). The long term rating signifies good credit quality with adequate protection factors. Risk factors are considered variable if changes occur in the economy. Short term rating of ‘A-2’ depicts good certainty of timely payment. Liquidity factors and company fundamentals are sound with good access to capital markets. Risk factors are small. Outlook on the assigned ratings is ‘Stable’.

MTL is a privately owned business which has been operating in the textile sector for over a decade. Principal activity of MTL includes production of yarn to primarily cater to the requirements of the local market. Extensive experience and track record of sponsors through business cycles in the textile sector is also a key rating driver.

Assigned ratings incorporate sound financial risk profile of MTL as manifested in the historically low leverage indicators and adequate liquidity levels. Assessment of financial risk profile also incorporates adequate profitability indicators which improved on the back of higher local volumetric sales coupled with lower inventory cost. Ratings also take into account MTL’s business risk profile due to volatility in cotton prices. Nonetheless, average selling prices followed a similar trend to cotton prices, increasing margins.

Liquidity profile of the company is considered adequate in view of satisfactory cash flows in relation to outstanding obligations. Moreover, equity base of the company has grown on the back of profit retention on a timeline basis. Given that management has no plans for capital expenditure in the near future, leverage indicators are projected to remain sound. Ratings will be contingent on maintenance of sustainable performance metrics and strong leverage indicators.

For further information on this rating announcement, please contact the undersigned (Ext: 201) or Ms. Muniba Khan (Ext: 215) or at 021-35311861-71 or fax to 021-35311872-3.

Javed Callea

Applicable Rating Criteria: Industrial Corporates (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 2019 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