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JCR-VIS assigns Initial Entity Ratings to Faisal Spinning Mills Limited

Karachi, March 30, 2018 (PPI-OT): JCR-VIS Credit Rating Company Limited (JCR-VIS) has assigned initial entity ratings of ‘A/A-1’ (Single A/A-One) to Faisal Spinning Mills Limited (FSML). Outlook on the assigned ratings is ‘Stable’. FSML is part of Umer Group of Companies, which owns diversified business interests with primary focus in textiles. Principal activity of FSML includes production of yarn and fabric to primarily cater to the requirements of the export market. The company has one spinning unit based in Nooriabad, Sindh and one weaving unit located in Ferozewatan, Sheikhupura. Spinning unit of the company is engaged in production of coarse yarn, while weaving unit manufactures greige cloth.

The assigned ratings are supported by sound liquidity and capitalization ratios and improving profitability indicators, thereby exhibiting sound financial profile. Ratings also reflect moderate business risk profile as depicted by fluctuations in cotton prices and currency exchange rates. Extensive experience and sound track record of sponsors is also factored in the assigned rating.

Profitability of the company was reported higher in Q1’18 and FY17 vis-a-vis the corresponding periods in preceding years. Bottom-line of the company improved on account of higher gross margins. Increase in gross margins was attributable to control over production related costs and increase in yarn prices.

Equity base of the company exhibited growth on timeline basis due to internal capital generation. Gearing and leverage indicators have also been reported lower in Q1’18 and FY17 due to lower short term borrowings and increase in equity base of FSML. In view of management’s expansion plan, debt leverage and gearing are expected to remain commensurate with the outstanding rating, going forward. Overall liquidity profile of company is considered sound as signified by healthy cash flows in relation to debt obligations and adequate current ratio. Trade debts also remain at manageable levels.

For more information, contact:
CFA
JCR-VIS Credit Rating Company Limited
VIS House, 128/C,
25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: sobia@jcrvis.com.pk