VIS Reaffirms Entity Ratings of Zephyr Textile Limited

Karachi, December 04, 2019 (PPI-OT): VIS Credit Rating Company Limited (VIS) has reaffirmed entity ratings assigned to Zephyr Textile Limited (ZTL) at ‘BBB+/A-2’ (Triple B-Plus/A-Two). The medium to long-term rating of ‘BBB+’ denotes adequate credit quality coupled with reasonable protection factors. Moreover, risk factors are considered variable if changes occur in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments. Liquidity factors and company fundamentals are considered sound. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on October 11, 2018.

The ratings assigned to ZTL take into account its moderate business risk profile emanating from a fairly diversified revenue stream within the textile industry and experienced senior management led by the sponsoring family. ZTL is a weaving and finishing unit and primarily operates in grey and finished fabric, towel and made-ups. The company has been making a gradual shift towards value-added textile products particularly commercial dying of knitted fabric for other companies and ladies fabric. The ratings are constrained by comparatively high gearing indicators and limited scale of operations, leading to heightened competitive challenges for the company.

FY20 is a challenging year for the company with considerable capex, the benefits of which would fully accrue from FY21. The impact of additional borrowing would increase the debt leverage and gearing indicators of the company and its financial risk profile. The ratings will be dependent upon timely completion of the expansion project within cost estimation and materialization of additional revenue. Any shortfall or delay in project may impact the ratings, going forward.

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: https://www.vis.com.pk/