Press Release

VIS Assigns Initial Entity Rating of A+/A-1 to Kohinoor Textile Mills Limited

Karachi, June 17, 2020: VIS Credit Rating Company Limited (VIS) has assigned initial rating of ‘A+/A-1’ (Single A plus/ Single A-One) to Kohinoor Textile Mills Limited (KTML) with ‘Rating Watch Developing’ status. The long term rating signifies good credit quality with adequate protection factors. The short-term rating of ‘A-1’ signifies high certainty of timely payment, liquidity factors are excellent and supported by good fundamental protection factors. Risk factors are minor.

The assigned ratings incorporate KTML’s diversified business risk profile, sound financial profile and adequate governance framework. Assessment of financial risk profile incorporates healthy cash flow coverages, moderately leveraged capital structure and improving profitability indicators (Pre-Covid). Working capital cycle & short-term liquidity have weakened and leverage indicators have increased in the ongoing year. Ratings draw comfort from KTML’s association with Kohinoor Maple Leaf Group which has presence in textile, cement, power generation and investment management.

The rating outlook reflects prevailing uncertainty in textile sector dynamics due to coronavirus outbreak, prolonged lockdown, overall contraction in demand, sharp fall in cotton prices 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-Developing’ status. Given the adequate financial profile, it is expected that ratings will remain stable post recovery of the ongoing situation; nevertheless, as scenario is evolving rapidly, VIS will closely monitor and will accordingly take action to resolve the outlook status.

KTML has a vertically integrated setup with presence across the broader value chain and is principally engaged in the manufacturing of yarn and cloth, processing & stitching the cloth and trade of textile products. Existing manufacturing facilities of KTML comprise two spinning units, one weaving unit and a home textile unit. The company’s head office is situated in Lahore, while a regional office is based in Karachi. The Company has adequate power generation arrangement in place with generation sources including gas, furnace oil, solar and WAPDA. Generation mix is shifted depending on cost effectiveness of each fuel source. Besides investment in real estate, KTML also has investment in Maple Leaf Cement Factory Limited (55.22%) and Maple Leaf Capital Limited (82.92%).

For further information on this rating announcement, please contact Mr. Talha Iqbal (Ext: 213) or the undersigned (Ext: 306) at (021) 35311861-66 or email at info@vis.com.pk .




Faryal Ahmad Faheem
Deputy CEO

Applicable Rating Criteria: Industrial Corporates (April 2019)
https://s3-us-west-2.amazonaws.com/backupsqlvis/docs/Corporate-Methodology-201904.pdf

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 2020 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .