Press Release

VIS Credit Rating Company Maintains Entity Ratings of Bhanero Textile Mills Limited

Karachi, May 27, 2021: VIS Credit Rating Company Limited (VIS) has maintained the entity ratings of Bhanero Textile Mills Limited (BHAT) at ‘A+/A-1’ (Single A Plus/A-One). Outlook on the assigned ratings has been revised from ‘Rating Watch Developing’ to ‘Stable’. Long Term Rating of A+ reflects good credit quality, adequate protection factors. Risk factors may vary with possible changes in the economy. Short Term Rating of A-1 indicates high certainty of timely payment, excellent liquidity factors supported by good fundamental protection factors and risk factors are minor. Previous rating action was announced on April 22, 2020.

BHAT is engaged in the business of manufacturing and trading of yarn and knitted fabric. The Company maintains two separate spinning units of which Unit-I consist of 27,840 spindles and Unit-II consist of 52,272 spindles. Both units are adequately equipped to produce cotton, rayon, ring spun & carded yarn. There is a separate facility for weaving operations installed with 162 air-jet looms. This unit produces mix ranges of fine woven greige cloths, from light to heavy, wider width, plain, textured, twills and luxurious satins. Around three-fourth of topline has comprised local sales. Segment wise yarn continues to be the major contributor with 59% (FY19: 63%) share in gross revenue in FY20. In view of long term growth strategy the company has planned to incur capital expenditure in the spinning segment which is expected to commence operations by July’22.

The assigned ratings incorporate the extensive experience of sponsor (Umer Group) in the textile industry spanning over three decades with well-diversified customer base spread across international markets. Ratings are constrained by high cyclicality & competitive intensity for spinning industry and volatility in cotton prices which translate into moderate to high business risk profile.

Assessment of financial risk profile incorporates weakening in profitability and liquidity profile during FY20 amidst COVID led slowdown in the economy; however the same has witnessed improvement during 9MFY21. Overall profitability profile of the company was impacted by higher cotton prices and currency devaluation on imported cotton during FY20. During 9MFY21, gross margins of the company improved on account of inventory gains and are projected to normalize to historic levels once the low price inventory is used up by Jan’22. Going forward, sales are expected to escalate on account of adequate orders in pipeline along with expansion in the spinning segment. The cash flow coverages of outstanding obligations declined in FY20 due to subdued profitability; however the same improved in 9MFY21 and are expected to remain in line with projected increase in overall profitability, going forward. Capitalization profile of the company is supported by low leveraged capital structure and conservative financial policy. Given financing of capex plans through long term borrowings, capitalization indicators of the company are expected to increase going forward, however the same are projected to remain within manageable levels.

For further information on this rating announcement, please contact Ms. Asfia Aziz or the undersigned (Ext: 201) at (021) 35311861-66 or email at

Javed Callea

Applicable Rating Criteria: Industrial Corporates (April 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