Press Release

VIS Upgrades Entity Ratings of Arshad Corporation (Pvt.) Limited

Karachi, September 27, 2021: VIS Credit Rating Company Limited (VIS) has upgraded the medium to long-term entity rating of Arshad Corporation (Pvt.) Limited (ACL) from ‘BBB+’ (Triple B Plus) to ‘A-’ (Single A Minus). The short-term rating has been maintained at ‘A-2’ (Single A-Two). Outlook on the assigned ratings has been revised from ‘Rating Watch-Negative’ to ‘Stable’. 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. Previous rating action was announced on April 23, 2020.

ACL is an export-oriented composite textile unit and primarily operates four business segments, including grey fabric, processed fabric, made-ups and garments. The U.S. and Europe are primary target markets, which account for nearly three-fourth of total sales. Shareholding of the company is held by the sponsoring family, who have been in the industry since 1954. The ratings take into account growth in topline driven by higher volumetric sales and average selling prices. Debt service coverage has remained adequate. Debt leverage has improved slightly in FY21 on the back of higher equity base despite increase in borrowings and trade and other payables. The management has embarked upon enhancing operational efficiencies, optimizing production capacities at the processing end and expanding production capacity of weaving segment to meet raw material demand through in-house production. Presence of the company in export-oriented textile sector with positive demand prospects, and support to the industry on the regulatory front also bodes well for ACL. Expected growth in revenues and profitability along with improvement in leverage indicators on account of profit retention and planned equity injection are the key rating drivers. Meanwhile, the ratings remain sensitive to exposure to exchange rate fluctuations and strong competition from local and regional textile players. The ratings will remain dependent on gradual decrease in gearing and maintenance of adequate coverages.

For further information on this rating announcement, please contact Ms. Tayyaba Ijaz at 042-35723411-13 (Ext. 8004) and/or the undersigned at 021-35311861-66 (Ext. 306) 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 .

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