Press Release

VIS Reaffirms Entity Ratings of A.A. Spinning Mills Limited

Karachi, February 26, 2020: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of A.A. Spinning Mills Limited (AASML) at ‘A-/A-2’ (Single A-Minus/A-Two). The medium to long-term rating of ‘A-’ denotes good credit quality coupled with adequate protection factors. Moreover, risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments. Liquidity factors and company fundamentals are considered sound and risk factors considered small. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on September 17, 2018.

AASML is a mid-sized spinning unit. Shareholding is vested with the sponsoring family who is actively involved in day-to-day operations of the company. The assigned ratings take into account AASML association with the Ibrahim Group, a large conglomerate with presence in textile and financial services. The ratings incorporate improvement in sales, margins and profitability driven by volumetric increase and higher yarn prices. Given low level of long-term borrowings, debt service coverage ratio has remained adequate with increasing cash flows, though liquidity in terms of current ratio has remained minimal. The ratings are constrained by nearly full capacity utilization, relatively high leverage indicators vis-à-vis peers, vulnerability of spinning sector to raw material prices and any adverse changes in regulatory duties. The ratings remain sensitive to maintenance of gearing levels within acceptable limits.

For further information on this rating announcement, please contact Ms. Tayyaba Ijaz 042-35723411-13 (Ext. 8004) and/or the undersigned at 021-35311861-66 (Ext. 201) or

Javed Callea

Applicable rating criterion: Corporates (May 2019)

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (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.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.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 2020 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

VIS Credit Rating Company Limited