Press Release

VIS Assigns Initial Entity Ratings to Akram Cotton Mills Limited
 

Karachi, July 3, 2019: VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘BBB-’/A-2’ (Triple B Minus/A-Two) to Akram Cotton Mills Limited (ACML). The medium to long-term rating of ‘BBB-’ denotes adequate credit quality coupled with reasonable & sufficient protection factors. Moreover, risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely repayment, sound liquidity factors and good company’s fundamentals. Outlook on the assigned ratings is ‘Stable’.

ACML is a spinning mill specialized in the production of carded cotton yarns for hosiery purposes. The company generates almost 100% sales through local customers. Shareholding is mainly vested with the sponsoring family which is actively involved in the day to day affairs of the company. The company generated sales growth during last three years through volumetric increase and favorable prices which impacted profits positively. With installation of new frames and compact devices on ring frames in beginning FY18, the company was able to optimize production and improve yarn quality. Resultantly, gross margins improved on a timeline basis. Trade receivables of the company continue to remain modest as yarn is mostly sold on a cash basis. Leverage indicators increased by end-HY19 mainly on account of seasonal procurement of cotton; as per management, the said indicators, given utilization of raw material, will be normalized by end-FY19. The company has a moderate financial risk profile emanating from adequate coverages and manageable leverage indicators. The ratings are dependent upon maintenance of profit margin, coverage and gearing ratios.

For further information on this rating announcement, please contact the undersigned at 021-35311861-70 or Mr. Maimoon Rasheed at 042-35723411-13.


Javed Callea
Advisor

Applicable rating criterion: Corporates (May 2019)
https://www.vis.com.pk/kc-meth.aspx

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Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited(Formerly JCR-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(Formerly JCR-VIS Credit Rating Company Limited), 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(Formerly JCR-VIS Credit Rating Company Limited) is not an NRSRO and its credit ratings are not NRSRO credit ratings.VIS(Formerly JCR-VIS Credit Rating Company Limited) 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 2019 VIS Credit Rating Company Limited(Formerly JCR-VIS Credit Rating Company Limited). All rights reserved. Contents may be used by news media with credit to VIS(Formerly JCR-VIS Credit Rating Company Limited).

VIS Credit Rating Company Limited (Formerly JCR-VIS Credit Rating Company Limited)