Press Release

VIS Maintains Ratings of Akram Cotton Mills Limited with ‘Rating Watch - Negative’ Status
 

Karachi, April 24, 2020: VIS Credit Rating Company Limited (VIS), while maintaining entity rating of ‘BBB’/A-2’ (Triple B /A-Two) assigned to ‘Akram Cotton Mills Limited (ACML)’, has placed the same on ‘Rating Watch - Negative’ status. 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. The previous rating action was announced on December 16, 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.

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 effected 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. Considering the scale of spinning operations of the company and being on the lowest of textile chain, ratings are being placed on ‘Negative’ outlook. Nevertheless as scenario is evolving rapidly, VIS will closely monitor and will accordingly take action to resolve the outlook status. The ratings are dependent upon maintenance of overall sales, profit margin, debt service coverage, and gearing ratios at prudent levels.

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





Faryal Faheem Ahmed
Deputy CEO

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 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