Press Release

VIS Maintains Entity Ratings of Din Textile Mills Limited with ‘Rating Watch-Negative’ Status
 

Karachi, April 27, 2020: VIS Credit Rating Company Limited (VIS) has maintained the entity ratings of Din Textile Mills Limited (DTML) at ‘BBB+/A-2’ (Triple B Plus/A-Two). The assigned ratings have been placed on ‘Rating Watch-Negative’ status. The medium to long-term rating of ‘BBB+’ denotes adequate credit quality with reasonable protection factors. 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 and risk factors considered small. The previous rating action was announced on December 31, 2018.


DTML belongs to Din group which has been operating in the textile sector for over three decades. Principal activity of the company includes production of yarn to primarily cater to the requirements of the local market. Other entities in the group are involved in production of leather and farm products. DTML’s production units comprise 5 manufacturing facilities including 4 spinning units & 1 dyeing unit located in Punjab.

The revision in rating outlook reflects prevailing uncertainty in textile sector dynamics due to coronavirus outbreak, prolonged lockdown, overall contraction in demand, sharp fall in cotton prices 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. Aforementioned operating dynamics coupled with leveraged capital structure of the company warrant a ‘Rating Watch-Negative’ status. The ratings are dependent upon maintenance of overall sales, profit margins, 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 Ms. Maham Qasim 042-35723411-13 (Ext. 8005) 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)
https://www.vis.com.pk/kc-meth.aspx

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