Press Release

VIS Assigns Initial Ratings to Crescent Bahuman Limited

Karachi, December 20, 2019: VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘A-/A-2’ (A Minus/A-Two) to Crescent Bahuman Limited (CBL). 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’ denotes good certainty of timely payments. Liquidity factors and company fundamentals are considered sound. Outlook on the assigned ratings is ‘Stable’.

CBL is an export-oriented, vertically integrated denim fabric and garment manufacturing company. The customer base of the company mainly includes Levi Strauss & Co., Express LLC, Realteks Tekstil, Dressmann AS, Jeans Collection and Grotto SPA. CBL was established as a joint venture between the Crescent Group and Greenwood Mills - U.S-based fabric manufacturing company - in 1995, however, the business incurred losses amidst U.S. sanctions between 1998 and 2000. Subsequently, the venture was dissolved and an extensive restructuring was carried out in 2001, whereby the Crescent Group assumed full ownership of the business. Shareholding of the company is mainly vested with the members of sponsoring family, associated companies, and International Finance Corporation.

The assigned ratings take into account moderate business risk profile of the company, underpinned by extensive experience of sponsors and senior management, vertically integrated denim jeans production capabilities, longstanding business relation with world renowned denim brands, improving supply chain efficiencies, and continued investment in automation, product development and sustainability initiatives. The ratings draw comfort from growing revenues and sustained profitability. However, profit margins have depicted volatility due to strong bargain power of customers, intensifying competition from the local and regional players, change in product mix and recognition of currency depreciation, in terms of exchange gain, in other income. Improvement in overall liquidity position has emanated from higher cash flows generation and considerable improvement in operating cycle over the past three years. Ratings take into account no major expansion plans in medium-term which would improve, leverage indicators with the accumulation of profits, going forward. The company’s capacity to meet its financial obligations is considered sufficient owing to adequate debt service coverage ratio. The ratings also factor in manageable financial risk profile of the company, reflected in improving gearing and debt leverage on account of profits retention and decrease in debt utilization on a timeline basis. Ratings would remain sensitive to sustained growth in topline and maintenance of margins and market relationships.

For further information on this rating announcement, please contact Syed Fahim Haider at 042-35723411-13 (Ext: 8006) or the undersigned at 021-35311861-70 (201) or email at

Javed Callea

VIS Entity Rating Criteria 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 .

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