KARACHI:VIS Credit Rating Company Limited has assigned initial entity ratings of single A plus/A-one to Suraj Cotton Mills Limited .
The medium to long-term rating of ‘A+’ denotes good credit quality coupled with adequate protection factors. Risk factors may vary with possible changes in the economy. The short-term rating of ‘A-1’ denotes high certainty of timely payments. Liquidity factors are excellent and supported by good fundamental protection factors.
Outlook on the assigned ratings is stable, said release on Wednesday.
SCML consists of four operating units of integrated spinning and weaving facilities at different locations. Majority of the shareholding is held by its associated company and sponsoring family.
The ratings assigned to SCML take into account positive momentum in revenue on the back of increase in volumetric sales and higher average selling prices.
The ratings derive strength from sound financial risk profile on account of sizable margins, strong liquidity profile and adequate debt coverages. Economies of scale and operational efficiencies resulting from time-to-time BMR has also reflected positively on
profitability. Leverage indicators have remained comfortable on a timeline basis.
The ratings also factor in ongoing capacity enhancement in weaving segment and upgradation of spinning unit. Positive outlook of the textile sector on the back of higher demand in export markets coupled with additional support to the industry on the regulatory front bodes well for SCML.