Press Release

JCR-VIS Re-affirms Ratings of A /A-2 of Sapphire Textile Mills Limited

Karachi, January 09, 2008: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Sapphire Textile Mills Ltd. (STML) at A (Single A) for the medium to long-term and A-2 (A Two) for the short-term. The outlook on the medium to long-term rating is ‘Stable’.

The ratings reflect the management’s strategy to maintain a conservative capital structure to align with the risk inherent in the cyclical textile industry while undertaking a consistent level of BMR and expansion on the plant facilities adequately supported by the internal generation from operations. The company has also increased the level of value-addition within the textile industry whereby the spinning division’s contribution to profit before tax has reduced in FY2007 and this focus is expected to be maintained in the medium-term to counter the narrowing margins in the industry.

JCR-VIS is closely following the results reported by the textile industry in FY2008 which is turning out to be a tight year for the industry with high cotton prices which are not offset by commensurate yarn prices due to intense competition in the global markets. However, we are of the opinion that STML is not likely to face any significant pressure on liquidity position due to the low level of debt leverage as well as presence of liquid investments.

JCR-VIS is further monitoring the impact of the current political and law and order situation of the country and rating actions will be updated as and when required.

For further information on this rating announcement, please contact Mr. Safdar Kazi ( or Ms. Sadaf Aliuddin ( at 021-5311861-70 (10 lines) or fax to 021-5311873.

Faheem Ahmad
President & CEO

Information herein was obtained from sources believed to be accurate and reliable; however, JCR-VIS Credit Rating Company Limited (JCR-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. JCR-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. JCR-VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings. JCR-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 2008 JCR-VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to JCR-VIS.

JCR-VIS Credit Rating Company Limited