Press Release

VIS Maintains Entity Ratings of Kohinoor Mills Limited

Karachi, April 19, 2021: VIS Credit Rating Company Limited (VIS) has maintained the entity ratings of Kohinoor Mills Limited (KML) at ‘BBB+/A-2’ (Triple B-Plus/A-Two), while the same has been placed on ‘Stable’ status. The medium to long-term rating of ‘BBB+’ denotes adequate credit quality with reasonable and sufficient protection factors. Moreover, risk factors are considered variable 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 April 27, 2020.

Being an export-oriented company, KML is principally engaged in the weaving, bleaching, dyeing, and finishing of grey, white, and dyed fabrics, driven by in-house Independent Power Producer (IPP). The company is a key supplier for globally renowned brands in the industry, with more than half of the clientele concentrated in Asia. Other exports markets include Europe, Canada, and the U.S.A. KML is planning to install a vertically integrated project involving construction of a small garment unit and also undertaken loom replacement project in the weaving division aimed at enhancing efficiencies.

The assigned ratings reflect company’s performance in FY20 whereby gross margins were maintained despite decline in volumes affected by the pandemic. While demand recovered, profitability in the first half of FY21 remained under pressure due to unavailability of production capacity as result of the loom replacement program. As a result cash flow coverages were affected. Profitability is expected to improve on a timeline basis as full capacity comes online.

Rating outlook reflects recovery in the textile sector dynamics on the back of improved demand given diversion of export orders from other regions along with government supportive measures for the industry. Going forward, ratings remain dependent on the improvement of cash flow coverage indicators and prudent capitalization indicators given undergoing modernization programs. VIS will continue to closely monitor the recovery phase and take actions accordingly.

For further information on this rating announcement, please contact Ms. Sara Ahmed (Ext. 207) and/or the undersigned at 021-35311861-66 (Ext. 207) or email at

Faryal Ahmad Faheem
Deputy CEO

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 2021 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

VIS Credit Rating Company Limited