Karachi, April 27, 2023 (PPI-OT): VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Best Fibres (Private) Limited (BFL) at ‘A-/A-2’ (Single A Minus/A-Two). Outlook on the assigned ratings is ‘Stable’. Long Term Rating of ‘A-’ good credit quality with adequate protection factors. Moreover, risk factors may vary with possible changes in economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments coupled with sound liquidity and fundamental protection factors. The previous rating action was announced on May 13, 2022.
Incorporated in 2017 as a private limited company, BFL is principally engaged in manufacturing and sale of yarn made from viscose, staple, fiber, cotton and / or man-made fiber. Spinning facility of the Company is situated on Sheikhupura road, Khurrianwala, Tehsil Jaranwala, District Faisalabad in the province of Punjab.
Ratings factor in pressure on margins, and weakening in liquidity and capitalization profile of the Company during the review period. Double-digit revenue growth in FY22 was largely driven by higher average selling prices. With subdued macroeconomic environment, topline growth was limited in HYFY23; however, management expects gradual increase in the same with projected ease in LC constraints over the remaining part of the ongoing fiscal year. On the profitability front, margins are under pressure due to currency devaluation, higher input costs and elevated finance costs.
Improving margins amidst ongoing challenging operating environment will be important from a ratings perspective. Liquidity profile of the Company depicts room for improvement going forward as evident from declining cash flow coverages of outstanding obligations in the review period being a determinant on thin margins. Given elevated short-term borrowings to meet working capital needs and growth in the same being greater than increment in equity, leverage indicators have inclined on a timeline basis. Nevertheless, given the challenging market dynamics and pressure on margins, improving financial risk profile over the rating horizon will remain critical for the ratings.
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/