Press Release

VIS Maintains Rating of Arshad Corporation (Pvt.) Limited with ‘Rating Watch - Negative’ Status

Karachi, April 23, 2020: VIS Credit Rating Company Limited (VIS), while maintaining the entity rating of ‘BBB+/A-2’ (Triple B-Plus/A-Two) assigned to Arshad Corporation (Pvt.) Limited (ACL), has placed the same on ‘Rating Watch - Negative’ status. The medium to long-term rating of ‘BBB+’ denotes adequate credit quality coupled with reasonable protection factors. Moreover, risk factors are considered variable if changes occur in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments. Liquidity factors and company fundamentals are considered sound. The previous rating action was announced on April 03, 2019.

ACL is an export-oriented composite textile unit and primarily operates four business segments, including grey fabric, fabric processing, garments and home textile made-ups. ACL also provides fabric processing services to other textile units. In a bid to grow exports and improve profit margins, the company has been increasingly focusing on fabric processing and printing segments. The U.S. and Europe are primary target markets and account for 80% of total sales.

With the advent of global Coronavirus disease (COVID-19) pandemic, the demand outlook for textile products in general and especially value-added, export-oriented units looks weak. Given ACL is highly dependent on exports sales for cash flows generation and servicing of its financial obligations, status of the assigned rating is therefore uncertain as an event of deviation from expected trend has occurred; additional information will be necessary to take any further rating action, warranting a ‘Rating-Watch’ status. With the demand compression emerging from ongoing global economic crisis and continued lockdown situation coupled relatively high financial risk profile vis-à-vis peer companies, ratings are being placed on ‘Negative’ outlook. The ratings are dependent upon maintenance of overall sales, market share in exports, profit margin, debt service coverage, and gearing ratios at an adequate level, with outlook subject to be reviewed once the situation stabilizes.

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 (306) or

Faryal Ahmad Faheem
Deputy CEO

VIS Entity Rating Criteria: Corporate (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 2020 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

VIS Credit Rating Company Limited