Press Release

JCR-VIS assigns Initial Ratings of Feroze1888 Mills Limited

Karachi, November 12th, 2018: JCR-VIS Credit Rating Company Limited (JCR-VIS) assigned initial entity ratings of ‘AA-/A-1’ (Double A Minus/A-One) to Feroze1888 Mills Limited. Outlook on the assigned ratings is ‘Stable’.

Feroze1888 Mills Limited (FML) is a public listed company and one of the largest terry textile exporters of Pakistan. It is a vertically integrated company engaged in end to end process from spinning to product packaging. FML operates through ten units at different locations including Hub, SITE and Landhi. Almost the entire sales of the company are geared towards the export market.

Assigned ratings take into account extensive experience of sponsors, long standing relationship with reputable clients, strong financial profile of the company highlighted by consistency in gross margins over the last four years, and limited risk as highlighted by low leverage indicators and sizeable cash flows to service debt.

Presence of FML via 1888 Mills in the USA has enabled FML to cater to the requirements of US-based clientele using a more hands-on approach. As a result the company has benefited from repeat sales and healthy margins. However, sales feature considerable client concentration which is partly mitigated by long standing relationship with reputable clients. Sound earnings profile has enabled the company to generate sizeable cash flows in relation to outstanding liabilities.

On a timeline basis, the equity base of FML has increased owing to consistent profits and retention of the same. The aforementioned factor coupled with the company’s conservative stance on borrowing has kept leverage indicators at minimal levels. In FY18, short term borrowings exhibited an increase, however the same are sufficiently covered by inventory and trade debts.

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

Javed A. 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