Press Release

Ratings of Akram Cotton Mills Limited
 

Karachi, December 16, 2019: VIS Credit Rating Company Limited (VIS) has revised medium to long-term entity rating of Akram Cotton Mills Limited (ACML) to ‘BBB’ (Triple B) from ‘BBB-’ (Triple B Minus) while maintaining the short-term rating at A-2 (A Two). The medium to long-term rating of ‘BBB’ denotes adequate credit quality coupled with reasonable & sufficient protection factors. Moreover, risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely repayment, sound liquidity factors and good company’s fundamentals. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on July 3, 2019.

ACML is a spinning mill specialized in the production of carded cotton yarns for hosiery purposes. The company generates almost 100% sales through local customers. Shareholding is mainly vested with the sponsoring family which is actively involved in the day to day affairs of the company. The company generated sales growth during last three years through volumetric increase and favorable prices which impacted profits positively. With installation of new frames and compact devices on ring frames in beginning FY18, the company was able to optimize production and improve yarn quality. Resultantly, gross margins improved on a timeline basis. Trade receivables of the company continue to remain modest as yarn is mostly sold on a cash basis. Leverage indicators improved by end-FY19 on the back of profit retention while maintaining overall borrowings. The company has a moderate financial risk profile emanating from adequate coverages and manageable leverage indicators. The ratings are dependent upon maintenance of profit margin, coverage and gearing ratios.

For further information on this rating announcement, please contact the undersigned at (021) 35311861-66 or email at info@vis.com.pk


Jamal Abbas Zaidi
Advisor

Applicable rating criterion: Corporates (May 2019)
https://www.vis.com.pk/kc-meth.aspx

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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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