Press Release

VIS Assigns Initial Entity Ratings to International Textile Limited

Karachi, March 4, 2019: VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘A/A-2’ (Single A/A-Two) to International Textile Limited (ITL). Outlook on the assigned ratings is ‘Stable’. The long term rating of ‘A’ signifies good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. The short term rating of ‘A-2’ signifies good certainty of timely payment. Liquidity factors and company fundamentals are sound. Access to capital markets is good. Risk factors are small.

The assigned ratings take into sound internal control framework and satisfactory financial profile as indicated by consistency in gross margins, low leverage indicators and adequate debt repayment capacity in view of sizeable cash flows vis-à-vis outstanding obligations.

Incorporated in 1985, ITL is a vertically integrated company engaged in spinning, sizing, processing of yarn, manufacturing of fabric, terry and their made ups. The company is primarily an export oriented company as the same constitute more than 95% of overall sales. Despite consistent sales, gross margins have improved due to favorable cotton procurement strategy. Improvement in gross margins coupled with exchange gains has translated into higher net margins on a timeline basis. Sustainability in margins and profitability in the given rating horizon would be an important rating determinant going forward.

Cash flows of the company have varied in line with the profitability of the company. Overall liquidity profile of the company is considered adequate in view of sufficient cash flows in relation to outstanding obligations, satisfactory debt servicing ability and aging of trade debts which remain within manageable levels. Current ratio of the company remains more than 1.0x, while trade debts and stock in trade are more than sufficient to cover short term borrowings. Equity base of the company has grown on timeline basis due to profit retention. The company has acquired short term finance for working capital requirements and no long term debt is availed by the company. With increase in total debt levels of the company, leverage indicators have trended upwards but continue to remain at manageable levels. Maintaining leverage indictors in line with projections is considered important from rating perspective.

For further information on this rating announcement, please contact the undersigned (Ext: 201) or Mr. Jamal Abbas Zaidi (Ext: 207) at 021-35311861-71 or fax to 021-35311872-3.

Javed Callea

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 .

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