Press Release

VIS Credit Rating Company Assigns Initial Entity Ratings to Union Apparel (Private) Limited

Karachi, December 17, 2019: VIS Credit Rating Company Limited has assigned initial entity ratings of ‘BBB/A-2’ (Triple B Plus/A-Two) to Union Apparel (Private) Limited (UAPL). Long Term Rating of ‘BBB’ denotes adequate credit quality; protection factors are reasonable and sufficient. Risk factors are considered variable if changes occur in the economy. 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. Outlook on the assigned ratings is ‘Stable’.

Setup in 2016, UAPL is a wholly-owned subsidiary of Union Fabrics (Private) Limited (UAPL), engaged in manufacture and sale of fabric to leading brands in the local market. The assigned ratings incorporate medium-size operations of the company with manageable leverage indicators, adequate margins and sufficient cash flow position in relation to outstanding debt. Ratings also factor in UAPL’s satisfactory order book position which provides adequate revenue visibility in the medium term.

UAPL’s sales are entirely represented by local sales. Net sales increased by 91% in FY19 on the back of higher volumes. Client base of the company comprises reputed fashion and lifestyle brands with largest customer representing more than four-fifth of revenues. Given ongoing efforts to induct new customers, management expects client concentration in revenues to reduce over ongoing fiscal year. In line with increase in gross margins, profitability of the company depicted growth in FY19. Going forward, increase in profitability will be a function of volumetric growth in sales and sustained margins.

Liquidity profile has improved in line with growth in profitability. Despite debt draw down to fund acquisition of manufacturing facilities, cash flow coverage metrics of the company are considered satisfactory. Gearing and leverage ratios of the company stood above 1x at end-FY19. With repayment of debt and equity injection from parent during ongoing fiscal year, gearing and leverage ratios are projected to improve over the rating horizon.

For further information on this rating announcement, please contact Mr. Muhammad Ibad Desmukh (Ext: 205) or the undersigned (Ext: 201) at (021) 35311861-66 or email at

Javed Callea

Applicable Rating Criteria: Industrial Corporates (May 2019)>

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 .

VIS Credit Rating Company Limited