Pakistan Credit Rating Agency Updates ratings of Fazal Cloth Mills

Lahore, November 19, 2012 (PPI-OT): The Pakistan Credit Rating Agency (PACRA) has maintained long term and short term entity ratings of Fazal Cloth Mills Limited (FCML) at ‘A-’ (single A minus) and ‘A2′ (A Two), respectively. Moreover, a “Positive outlook” is assigned to the ratings. These ratings denote a low expectation of credit risk. The capacity for timely payment of financial commitments is considered strong.

The ratings reflect FCML’s improving market position in the country’s textile sector emanating from its steady expansion plans, growing revenues, and improving efficiencies, in turn, business margins. The company, through forward integration, has lately ventured into fabric manufacturing segment thus diversifying its product mix besides adding new capacity to its spinning unit.

Although the company maintains a leveraged capital structure, comfort is drawn from improving operational cash flows, in turn, coverages. The ratings recognize the company’s seasoned management team, having sound understanding of the industry dynamics and quality support infrastructure.

The ratings have been assigned a ‘Positive Outlook’ recognizing the benefits to accrue to the company from its improving business risk profile that is likely to engender good risk absorption capacity against the challenging business dynamics. However, strong growth brings challenges that require strengthening in the governance and monitoring framework, alongwith human resource development.

Moreover, the company’s ability to sustain its competitive positioning in its key markets, while timely managing expansion, would remain critical. Any adverse changes in the socio-economic environment impacting the company’s risk profile would have negative implications for the ratings.

For more information, contact:
Hammad Rashid
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com

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