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Pakistan Credit Rating Agency Limited upgrades entity ratings of Kohinoor Textile Mills

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by November 26, 2015 General

Lahore, November 26, 2015 (PPI-OT): The Pakistan Credit Rating Agency Limited (PACRA) has upgraded the long-term and short-term entity ratings of Kohinoor Textile Mills Limited (KTML) to ‘A’ (Single A) [previous: A-], and ‘A1’ (A One) [previous: A2], respectively. These ratings denote a low expectation of credit risk emanating from a strong capacity for timely payment of financial commitments.

The ratings reflect KTML’s strong business profile emanating from presence in the broader value-chain – upto home textile – providing the ability to manage volatility in different elements along the chain. The company has started establishing itself as a niche player – exporting high standard customized home textile products – to selected clientele. This is a high margin business, which helped KTML to strengthen its performance despite deterioration in local textile sector fundamentals. Meanwhile, the company’s lean inventory management system and related efficiencies provided further cushion.

The management structure is well-organized allowing business segments to operate with autonomy. KTML has witnessed notable improvement in financial profile, a result of healthy operational cash flows; thus improved coverages. Meanwhile, gradual build-up of dividend stream from subsidiary – Maple Leaf Cement – is expected; this provides added comfort. Nevertheless, a sizeable amount of available cash is invested in blue-chip listed shares, which remains subject to market risk.

The ratings are dependent on the company’s ability to prudently manage its debt profile. Sustaining business margins to support profitability remains important. Moreover, induction of independent members on board for better governance is considered important.

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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