Karachi, July 19, 2021 (PPI-OT):VIS Credit Rating Company Limited has assigned initial entity ratings of ‘A-/A-2’ (A Minus/A-Two) to Rizwan Enterprises (RE). Long Term Rating of ‘A-’ reflects good credit quality with adequate protection factors. Risk factors may vary with possible changes in the economy. Short Term Rating of ‘A-2’ signifies good certainty of timely payment, sound liquidity factors and company fundamentals, and good access to capital markets. Risk factors are small. Outlook on the assigned ratings is ‘Stable’.
Rizwan Enterprises (RE) is a moderate-sized partnership concern engaged in weaving and sizing business with limited presence in stitching segment. The sponsors have extensive experience of more than 40 years in textile business. RE is an export-oriented company with product portfolio including greige fabrics, finished fabrics ROT, bedding, organic bedding, hospitality and healthcare fabrics and pocketing. Manufacturing facility is located in S.I.T.E Karachi.
Assigned ratings captures the limited impact of Covid-19 pandemic on company’s overall performance. Topline, despite the pandemic-induced slowdown, witness a growth trend on account of higher average selling prices while margins have sustained during last two consecutive years. Liquidity profile remains sound while timeline growth in earnings has led to improvement in cash flow coverages. Capital structure is considered conservative with adequate level of leverage indicators. Ratings take into account the company’s ability to achieve revenue growth through expansion along with committed policy to maintain strong capitalization indicators.
Capacity utilization remained under pressure in FY20 due to pandemic related reduction in demand. However, given subsequent economic recovery utilization levels have recovered in the ongoing year on account of sizeable jump in export orders. In view of the same, the management has planned to increase the weaving capacity and install 34 Picanol airjet looms. Post expansion, the installed production capacity would increase by ~21%. Since last review, the company has diversified into new regions including France, Greece, Bulgaria and Australia.
For more information, contact:
Director Compliance and Rating Analytics,
VIS Credit Rating Company Limited
VIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi, Pakistan
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