Press Release

VIS Maintains Entity Ratings of A.A. Spinning Mills Limited
 

Karachi, April 27, 2020: VIS Credit Rating Company Limited (VIS) has maintained the entity ratings of A.A. Spinning Mills Limited (AASML) at ‘A-/A-2’ (Single A-Minus/A-Two). The assigned ratings have been placed on ‘Rating Watch-Developing’ status. The medium to long-term rating of ‘A-’ denotes good credit quality coupled with adequate 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 payments. Liquidity factors and company fundamentals are considered sound and risk factors considered small. The previous rating action was announced on February 26, 2020.

AASML is a mid-sized spinning unit. Shareholding is vested with the sponsoring family who is actively involved in day-to-day operations of the company. The assigned ratings take into account AASML association with the Ibrahim Group, a large conglomerate with presence in textile and financial services. The company largely produces 14s to 30s count yarn. Total sales constituted majorly local sales, while exports have remained marginal over the years.

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 impacted 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 the relatively low leveraged capital structure and sound financial profile, 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 Ms. Tayyaba Ijaz 042-35723411-13 (Ext. 8004) and/or the undersigned at 021-35311861-66 (Ext. 201) or email at info@vis.com.pk



Faryal Ahmad Faheem
Deputy CEO


Applicable rating criterion: Corporates (May 2019)
http://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 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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