Karachi, June 29, 2022 (PPI-OT):VIS Credit Rating Company Limited (VIS) has revised the medium to long-term rating of Khalid Shafique Spinning Mills Limited (KSSML) from ‘BBB’ (Triple B) to ‘BBB+’ (Triple B Plus) while maintaining the short-term rating at ‘A-2’ (A-Two). The medium to long-term rating of ‘BBB+’ denotes adequate credit quality coupled with reasonable protection factors. Moreover, risk factors are considered variable if changes occur in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments coupled with sound liquidity and company fundamentals. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on June 11, 2021.
KSSML is a spinning unit, majority owned and managed by the sponsoring family. The assigned ratings take into account increase in revenue, margins and profitability during FY21 and 9MFY22 underpinned by higher volumetric sales and favourable yarn prices. The ratings also factor in considerable improvement in coverages and liquidity indicators. Coverages are projected to remain sound despite considerable decline in projected margins, going forward. Gearing has remained comfortable, that is in line with the assigned rating.
The company has conducted balance, modernization, and replacement (BMR) of its spinning unit by replacing old ring frames in order to enhance production efficiencies; the impact of the same is expected to be seen, going forward. Whilst the ratings factor in high cyclicality and competitive intensity for spinning industry along with volatility in cotton prices, overall business risk profile of the textile industry is supported by stable demand and favourable regulatory regime. The ratings will remain dependent on maintaining liquidity and capitalization indicators at adequate levels while achieving projected revenue and profitability.
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/