Press Release

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

Karachi, April 22, 2020: VIS Credit Rating Company Limited (VIS) has maintained entity ratings of Sapphire Textile Mills Limited (STML) at ‘A+/A-1’ (Single A Plus/A-One). The assigned ratings have been placed on ‘Rating Watch-Developing’ status. 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. The previous rating action was announced on December 05, 2019.

The assigned ratings incorporate STML being part of the Sapphire Group of Companies. Sapphire group is amongst the leading textile exporters in the country and has presence across the broader value chain. Ratings also reflect the company’s diversified business risk profile with core textile operations being complemented by investment in power sector along with a sizeable portfolio of marketable securities. Assigned ratings capture sound financial performance and successful operations of 3x50MW wind power project- Tricon Boston Consulting Corporation (Private) Limited (TBCCL). The assigned ratings incorporate STML’s historically strong operating performance with capacity utilization of all segments remaining high. Focus remains on value addition and increasing proportion of finished segment in the sales mix.

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-Developing’ status. Given the diversified operations and 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.

For further information on this rating announcement, please contact Mr. Talha Iqbal (Ext: 213) or the undersigned (Ext. 306) at 021-35311861-70 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 .