Karachi, October 25, 2016: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Sapphire Textile Mills Limited (STML) at ‘A+/A-1’ (Single A Plus/A-One). Outlook on the assigned ratings remains ‘Positive’. The previous rating action was announced on June 1, 2015.
Ratings take into account the emerging diversification in the corporate profile of the company from a textile products dominated unit to one with diversified revenue streams from investments and wind power projects. The high growth textile retail segment is another area where the company plans to expand its outreach.
Given the recessionary cycle in the textile sector internationally, the company envisages a greater contribution from value added segment which would instill resilience in company’s market position. Pursuing its stated objectives, the company has successfully installed a finishing and printing facility to facilitate the manufacture of ready-made garments; materialization of these plans will be tested over time.
STML has managed to maintain its gross profit margins in the challenging operating environment. Bottom line is supported through dividends from investments. The company maintains a sizeable portfolio invested in listed securities which contribute to sound liquidity position.
STML has established presence in renewable energy sector; the company made an investment worth Rs. 2.3b in a wind power plant with a nameplate capacity of 50MW; the plant became operational in the latter half of 2015. Over the next three years STML plans to install three more wind power plants, which will increase leverage indicators, expected cash flows from the same will return leverage indicators to levels commensurate with the outstanding ratings. Ratings draw support from proven track record of successfully executing wind power project.
For further information on this rating announcement, please contact the undersigned (Ext: 234) or Mr. Jamal Abbas Zaidi (Ext: 249) at 35311861-70 or fax to 35311872.
Applicable Criteria: Industrial Corporates (May 2016)
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