Press Release

VIS Maintains Ratings of Gadoon Textile Mills Limited

Karachi, April 24, 2020: VIS Credit Rating Company Limited (VIS), while maintaining the entity ratings of ‘A+/A-1’ (Single A Plus/A-One) assigned to Gadoon Textile Mills Limited (GTML), has placed the same on ‘Rating Watch-Developing’ status. The long-term rating of ‘A+’ signifies good credit quality and adequate protection factors; risk factors may vary with possible changes in the economy. The short-term rating of ‘A-1’ signifies high certainty of timely payment; liquidity factors are excellent and supported by good fundamental protection factors while risk factors are minor. Previous rating action was announced on December 13, 2019.

GTML is part of Yunus Brothers Group (YBG). The company is the largest spinning enterprise in the country and has around three decades of experience in the textile sector. GTML produces yarn (both coarse & fine counts) through two units located at Swabi District in Khyber Pakhtunkhwa (Unit A) and at Karachi in Sindh (Unit B) and knitted fabric through Unit B. The company’s yarn is primarily sold to large scale local textile industry, the key markets being Karachi, Faisalabad and Lahore. GTML also sells products to international market. “Koyal” (local) and “Peach” (export) are two of GTML’s key brands. As of FY19, the company had a topline of Rs. 31b, majority (92%) of which emanated from yarn sales.

The revision in rating outlook reflects prevailing uncertainty in textile sector dynamics due to coronavirus outbreak, prolonged lockdown, overall contraction in demand and challenging economic environment. It is expected that the entire value chain of the textile industry will be affected by these developments. 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-Developing’ status. Given that the company has low borrowings compared to its equity level, it is expected that ratings will remain stable post recovery of the ongoing situation; nevertheless as scenario is evolving rapidly, VIS will closely monitor and will accordingly take action to resolve the outlook status.

For further information on this rating announcement, please contact Mr. Arsal Ayub (Ext: 214) or the undersigned (Ext: 201) at 35311861-66 or email at

Faryal Ahmad Faheem
Deputy CEO

Applicable 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 2020 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

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