Karachi, March 11, 2019 (PPI-OT): VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘BBB+/A-2’ (Triple B-Plus /A-Two) to Kohinoor Mills Limited (KML). The medium to long-term rating of ‘BBB+’ denotes adequate credit quality coupled with reasonable protection factors. Moreover, risk factors are considered variable if changes occur in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments. Liquidity factors and company fundamentals are considered sound. Outlook on the assigned ratings is ‘Stable’.
KML is export oriented listed company, principally engaged in the business of textile manufacturing covering weaving, bleaching, dyeing, and generation and supply of electricity for internal consumption. The assigned ratings take into account its adequate scale of integrated textile operations. The ratings factor in moderate business risk profile; the company has been able to increase its revenues and largely sustain profitability in a highly competitive international market. Further, the ratings incorporate KML as a key supplier to globally renowned brands while maintaining an adequate customer concentration. Moreover, recent devaluation of Pak rupee and favourable government policies bode well for the company. The ratings also draw comfort from the company’s strong BoD profile, experienced management team and adequate corporate governance framework.
Although debt service coverage remains adequate, high gearing and leverage indicators expose KML to relatively higher financial risk and act as a rating constraint. While KML has been able steadily increase its turnover, decreasing margins and increasing international competition are key challenges faced by KML. The ratings are dependent upon reduction in leverage indicators and improvement in liquidity profile of the company.
For more information, contact:
Director Compliance and Rating Analytics,
VIS Credit Rating Company Limited
VIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi, Pakistan