Press Release

VIS assigns initial ratings to Pak Kuwait Textiles Limited

Karachi, April 30, 2019: VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘BBB+/A-2’ (Triple B Plus/A-Two) to Pak Kuwait Textiles Limited (PKTL). The medium to long-term rating of ‘BBB+’ denotes adequate credit quality with reasonable protection factors. Moreover, risk factors may vary with possible changes in economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments coupled with sound liquidity and company fundamentals. Outlook on the assigned rating is ‘Stable’.

PKTL is a medium-sized textile spinning unit. The principal activities of the company include production and trading of high quality rising spun polyester/cotton (P/C) blended and 100% cotton yarn. The ratings assigned to PKTL take into account moderate business risk profile of the company supported by growth in revenues, improved margins, higher profitability, and considerable relevant experience of the sponsors. The ratings draw comfort from sound liquidity position, low leverage indicators, minimal reliance on long-term borrowing and adequate coverages. However, vulnerability of spinning sector to raw material prices remains a key challenge faced by the company. The ratings also factor in full capacity utilization of existing units and lack of expansion plan.

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: Corporates (May 2016)

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