April 24, 2020 (PPI-OT)

Following is the text of press release issued by VIS Credit Rating Company Limited

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VIS Credit Rating Company Limited (VIS), while maintaining the entity ratings of 'A+/A-1' (Single A Plus/A-One) assigned to Gadoon Textile Mills Limited (GTML), has placed the same on 'Rating Watch-Negative' status. The long-term rating of 'A+' signifies good credit quality and adequate protection factors; risk factors may vary with possible changes in the economy. The short-term rating of 'A-1' signifies high certainty of timely payment; liquidity factors are excellent and supported by good fundamental protection factors while risk factors are minor. Previous rating action was announced on December 13, 2019.

GTML is part of Yunus Brothers Group (YBG). The company is the largest spinning enterprise in the country and has around three decades of experience in the textile sector. GTML produces yarn (both coarse and fine counts) through two units located at Swabi District in Khyber Pakhtunkhwa (Unit A) and at Karachi in Sindh (Unit B) and knitted fabric through Unit B. The company's yarn is primarily sold to large scale local textile industry, the key markets being Karachi, Faisalabad and Lahore. GTML also sells products to international market. "Koyal" (local) and "Peach" (export) are two of GTML's key brands. As of FY19, the company had a topline of Rs. 31b, majority (92%) of which emanated from yarn sales.

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 impacted 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, warranting a 'Rating-Watch' status. With the demand compression emerging from ongoing global economic crisis and continued lockdown situation, ratings are being placed on 'Negative' outlook. The ratings are dependent upon maintenance of overall sales, market share in exports, profit margin, debt service coverage, and gearing ratios at an adequate level, with outlook subject to be reviewed once the situation stabilizes.

For more information, contact:Director Compliance and Rating Analytics,VIS Credit Rating Company LimitedVIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,Phase VII, DHA, Karachi, PakistanTel: +92-21-35311861-72Fax: +92-21-35311873Email: bilal@jcrvis.com.pkWebsite: https://www.vis.com.pk/

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© Pakistan Press International, source Asianet-Pakistan