Press Release

VIS Maintains Entity Ratings of Indus Lyallpur Company Limited

Karachi, June 15, 2021: VIS Credit Rating Company Limited (VIS) has maintained the entity ratings of Indus Lyallpur Company Limited (ILCL) at ‘BBB+/A-2’ (Triple B/A-Two). Outlook on the ratings has been revised from ‘Rating Watch-Developing’ to ‘Positive’. Long Term Rating of BBB+ reflects adequate credit quality; protection factors are reasonable and sufficient. Risk factors are considered variable if changes occur in the economy. The short term rating of A-2 indicates good certainty of timely payment. Liquidity factors and company fundamentals are sound. Access to capital markets is good and risk factors are small. The previous rating action was announced on April 22, 2020.

ILCL is a wholly owned subsidiary of Indus Dyeing and Manufacturing Company Limited (IDMC). IDMC belongs to the Indus Group which has been operating in the textile sector for over five decades. Principal activity of ILCL includes production of yarn for exports and local industry. ILCL’s production facility is situated in Faisalabad.

The revision in outlook incorporates improved financial risk profile during 9MFY21 and the recovery in overall Pakistan’s textile sector exports post ease in COVID-19 lockdown measures. The local textile players have benefited from the diversion of the orders from the neighboring countries facing more severe COVID-19 crisis. During FY20, ILCL posted limited growth in topline, while overall profitability witnessed considerable decrease in comparison to the preceding year due to COVID-19 related disruption. However, subsequent recovery in demand, increase in yarn prices and post expansion increase in sales volumes contributed to significant increase in sales revenue and profitability metrics during 9M’FY21.

Liquidity profile of the company has varied in line with the profitability of the company. Overall liquidity profile is considered satisfactory in view of the adequate cash flows and sound debt servicing ability. The company witnessed an increase in its borrowing levels during the period under review to facilitate expansion and replacement of old machinery, thereby leading to increase in leverage indicators. However, in the absence of the any significant future capital expenditure plans and projected improvement in profitability, capitalization indicators are expected to improve over the ratings horizon. Sustained improvement in profitability and leverage indicators is considered important from the ratings perspective.

For further information on this rating announcement, please contact Mr. Narendar Shankar Lal (Ext: 203) or the undersigned (Ext: 201) at (021) 35311861-66 or email at

Javed Callea

Applicable Rating Criteria: 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 .

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