Karachi, December 01, 2021 (PPI-OT):VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘A+/A-1’ (Single A Plus/A-One) to Suraj Cotton Mills Limited (SCML). The medium to long-term rating of ‘A+’ denotes good credit quality coupled with adequate protection factors. Risk factors may vary with possible changes in the economy. The short-term rating of ‘A-1’ denotes high certainty of timely payments. Liquidity factors are excellent and supported by good fundamental protection factors. Outlook on the assigned ratings is ‘Stable’.

SCML consists of four operating units of integrated spinning and weaving facilities at different locations. Majority of the shareholding is held by its associated company and sponsoring family. The ratings assigned to SCML take into account positive momentum in revenue on the back of increase in volumetric sales and higher average selling prices. The ratings derive strength from sound financial risk profile on account of sizeable margins, strong liquidity profile and adequate debt coverages. Economies of scale and operational efficiencies resulting from time-to-time BMR has also reflected positively on profitability. Leverage indicators have remained comfortable on a timeline basis.

The ratings also factor in ongoing capacity enhancement in weaving segment and upgradation of spinning unit. Positive outlook of the textile sector on the back of higher demand in export markets coupled with additional support to the industry on the regulatory front bodes well for SCML. Meanwhile, the ratings are constrained by vulnerability of spinning sector to raw material prices and any adverse changes in regulatory duties. Ratings would also be dependent upon timely materialization of the ongoing capex, achievement of projected sales growth and profitability while maintaining capitalization indicators at adequate level.

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
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: bilal@jcrvis.com.pk
Website: https://www.vis.com.pk/