Press Release

VIS Credit Rating Company Maintains Entity Ratings of International Textile Limited

Karachi, May 11, 2020: VIS Credit Rating Company Limited (VIS) has maintained entity ratings of International Textile Limited (ITL) at ‘A/A-2’ (Single A/A-Two). The assigned ratings have been placed on ‘Rating Watch-Developing’ status. The long term rating of ‘A’ signifies good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. The short term rating of ‘A-2’ signifies 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 4, 2019.

Incorporated in 1985, ITL is a vertically integrated company engaged in spinning, sizing, processing of yarn, manufacturing of fabric, terry and their made ups. The assigned ratings take into sound internal control framework and satisfactory financial profile as indicated by improving profitability on timeline basis, low leverage indicators and adequate debt repayment capacity. The company is primarily an export oriented company as the same constitute more than 95% of overall sales. Healthier sales mix contributed to improvement in gross margins during HY20 vis-à-vis the corresponding period in the previous year. Sustainability in margins and profitability in the given rating horizon would be an important rating drivers going forward. Cash flows of the company have varied in line with the profitability of the company. Overall liquidity profile of the company is considered adequate in view of sufficient cash flows in relation to outstanding obligations and satisfactory debt servicing ability. Leverage indicators remain at manageable levels. Maintaining leverage indicators in line with the benchmark for the assigned ratings is considered important from ratings perspective.

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. Comfort is drawn from increase in demand from the healthcare segment to which the ITL caters through its various products and low leveraged capital structure of the company; it is expected that ratings will remain stable post recovery of the ongoing situation but as the 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. Narendar Shankar Lal (Ext: 203) 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 .