JCR-VIS reaffirms Rating of the Rs. 1.385b Sukuk issued by Quetta Textile Mills Limited

Karachi: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the rating assigned to the Rs 1.385 billion Sukuk of Quetta Textile Mills Limited (QTML) at ‘BBB+’ (Triple B Plus). Outlook on the rating is ‘Stable’.

Rating takes into account the improved results posted by QTML in FY11 despite high cotton prices which were off-set by commensurate increase in yarn and fabric prices as demand-supply deficit widened.

While leverage has improved considerably over the last two years on account of improved financial results, it is still considered high. Following two years of healthy margins enjoyed by the sector, margins may be expected to normalize to historical levels, given the current trend in prices.

Cash flow coverages may come under pressure if margins are not maintained at current levels. In line with the stepped up principal repayment schedule of the Sukuk issue, major instalments will be due from 2013 onwards.

JCR-VIS will continue to monitor the developing risk profile of the company in the backdrop of price trends in the industry.

For further information on this rating announcement, please contact Mr. Javed Callea (Ext: 501) or Ms. Sobia Maqbool, CFA (Ext: 506) at 021-35311861 or fax to 021-35311873.

For more information, contact:
Mr. Javed Callea
Advisor
JCR-VIS Credit Rating Company Limited
Tel: +9221 35311861 (10 lines) (Ext: 501)
Fax: +9221 35311872-3
E mail: javed.callea@jcrvis.com.pk