Press Release

VIS Maintains Ratings of H.A Fibres (Pvt.) Limited with ‘Rating Watch - Developing’ Status
 

Karachi, April 24, 2020: VIS Credit Rating Company Limited (VIS), while maintaining the entity ratings of ‘A-’/A-2’ (Single A Minus/A-Two) assigned to H.A Fibres (Pvt.) Limited (HAFL), has placed the same on ‘Rating Watch - Developing’ status. The medium to long-term rating of ‘A-’ denotes good credit quality coupled with adequate 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. The previous rating action was announced on April 3, 2019.


HAFL is engaged in the sales of 100% cotton carded compact yarn while sales is generated through both local & export markets. Shareholding is mainly vested with the sponsoring family which is actively involved in the day to day affairs of the company. The group also operates another spinning mill with the name of “Husnain Textile Mills (Pvt.) Limited” (HTML); HAFL holds 30% equity in HTML. The assigned ratings take into account a gradual improvement in topline mainly supported by higher yarn prices. Overall liquidity indicators have remained adequate. The ratings also factor in improving cash flows, despite elevated finance cost, and sound coverages. A decreasing trend has been witnessed in leverage indicators.


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 effected 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. Given that company has largely stable financial risk 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. The ratings are dependent upon maintenance of sales, profit margin and gearing ratios at an adequate level, with outlook subject to be reviewed once the situation stabilizes.


For further information on this rating announcement, please contact the undersigned at (021) 35311861-66 or email at info@vis.com.pk .




Faryal Faheem Ahmed
Deputy CEO



Applicable rating criterion: Corporates (May 2019)

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