VIS Assigns Initial Entity Ratings to International Textile Limited

Karachi, March 04, 2019 (PPI-OT): VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘A/A-2’ (Single A/A-Two) to International Textile Limited (ITL). Outlook on the assigned ratings is ‘Stable’. The long term rating of ‘A’ signifies good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. The short term rating of ‘A-2’ signifies good certainty of timely payment.

Liquidity factors and company fundamentals are sound. Access to capital markets is good. Risk factors are small. The assigned ratings take into sound internal control framework and satisfactory financial profile as indicated by consistency in gross margins, low leverage indicators and adequate debt repayment capacity in view of sizeable cash flows vis-à-vis outstanding obligations.

Incorporated in 1985, ITL is a vertically integrated company engaged in spinning, sizing, processing of yarn, manufacturing of fabric, terry and their made ups. The company is primarily an export oriented company as the same constitute more than 95% of overall sales. Despite consistent sales, gross margins have improved due to favourable cotton procurement strategy. Improvement in gross margins coupled with exchange gains has translated into higher net margins on a timeline basis. Sustainability in margins and profitability in the given rating horizon would be an important rating determinant going forward.

Cash flows of the company have varied in line with the profitability of the company. Overall liquidity profile of the company is considered adequate in view of sufficient cash flows in relation to outstanding obligations, satisfactory debt servicing ability and aging of trade debts which remain within manageable levels. Current ratio of the company remains more than 1.0x, while trade debts and stock in trade are more than sufficient to cover short term borrowings.

Equity base of the company has grown on timeline basis due to profit retention. The company has acquired short term finance for working capital requirements and no long term debt is availed by the company. With increase in total debt levels of the company, leverage indicators have trended upwards but continue to remain at manageable levels. Maintaining leverage indictors in line with projections is considered important from rating perspective.

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
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: bilal@jcrvis.com.pk
Website: http://jcrvis.com.pk/