Press Release

VIS Maintains Ratings of Nadeem Textile Mills Limited

Karachi, April 24, 2020: VIS Credit Rating Company Limited (VIS), while maintaining the entity ratings of ‘BBB+/A-2’ (Triple B Plus/A-Two) assigned to Nadeem Textile Mills Limited (NTML), has placed the same on ‘Rating Watch-Negative’ status. 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. 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. Risk factors are small. Previous rating action was announced on March 9, 2020.

Nadeem Textile Mills Limited (NTML) is engaged in the manufacturing and sale of yarn business for more than three decades and operates via two spinning units located in Nooriabad and Kotri, Sindh. The rating derives impetus from long-standing association of the sponsors with the textile industry. NTML’s topline is derived from three major sources i.e. domestic sales (42%), direct export sales (32%) and indirect export sales (25%). The company’s cash conversion cycle, and overall gearing & leveraging, as of Dec’19, have been reviewed and gauged to be aligned with VIS benchmarks.

The revision in rating outlook reflects prevailing uncertainty in textile sector dynamics due to coronavirus outbreak, prolonged lockdown, overall contraction in demand and challenging economic environment. It is expected that the entire value chain of the textile industry will be impacted by these developments. Status of the assigned rating is therefore uncertain as an event of deviation from expected trend has occurred; additional information will be necessary to take any further rating action, warranting a ‘Rating-Watch’ status. With the demand compression emerging from ongoing global economic crisis and continued lockdown situation, ratings are being placed on ‘Negative’ outlook. The ratings are dependent upon maintenance of overall sales, market share in exports, profit margin, debt service coverage, and gearing ratios at an adequate level, with outlook subject to be reviewed once the situation stabilizes.

For further information on this rating announcement, please contact Mr. Arsal Ayub (Ext: 214) or the undersigned (Ext: 201) at 35311861-66 or email at info@vis.com.pk.



Faryal Ahmad Faheem
Deputy CEO

Applicable Criteria: Industrial Corporates (May, 2019)

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