Press Release

JCR-VIS Reaffirms Entity Ratings of Indus Dyeing and Manufacturing Co Ltd.

Karachi, July 31, 2018: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Indus Dyeing and Manufacturing Co Ltd (IDMC) at ‘A+/A-1’ (Single A Plus/A-One). Outlook on the assigned ratings is ‘Stable’.

IDMC operates under the umbrella of Indus Group of Companies. The core business activity of the company is to manufacture and sell yarn to both local and international players. The company’s production units are located in Karachi, Hyderabad and Muzaffargarh comprising around 180,000 spindles. The group has interests in greige fabric and home textile in addition to the aforementioned manufacture and sale of yarn. The group also plans to diversify its operations into wind energy.

Ratings assigned to IDMC take into account the company’s established track record in the textile spinning industry, improving profitability profile, sound liquidity indicators and manageable leverage indicators. However, ratings are constrained by cyclicality in earnings profile. Going forward, improvement in profitability is expected to emanate from favorable selling price on the back of rupee devaluation. IDMC’s sales are also expected to be impacted by changes in export prices resulting from rupee devaluation.

Gross profit of IDMC for the ongoing year and FY17 increased owing to favorable price adjustment in selling price relative to cost. Resultantly, there was a favorable impact on the Funds From Operations (FFO) in relation to long-term debt multiples of IDMC. Additionally, the debt servicing ability of the company slightly declined in the ongoing year due to higher principal repayment. Given the significant take up of short-term borrowing on the back of cotton procurement and the relatively lesser increase in the equity profile of IDMC, leverage indicators also slightly weakened for the current year.

Going forward, the financial profile of IDMC is susceptible to industry risk whereby adverse changes in the yarn prices will directly impact the profitability margins. The investment of IDMC in wind energy is expected to positively impact the bottom line of the company.

For further information on this rating announcement, please contact the undersigned (Ext: 201) at 021-35311861-70 or fax to 021-35311872.

Javed Callea
Applicable Criteria: Industrial Corporates (May 2016)

Information herein was obtained from sources believed to be accurate and reliable; however, JCR-VIS Credit Rating Company Limited JCR-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.JCR-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.JCR-VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings.JCR-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 2018 JCR-VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to JCR-VIS.

JCR-VIS Credit Rating Company Limited