JCR-VIS reaffirms Entity Ratings of Shafi Texcel Limited

Karachi, March 20, 2013 (PPI-OT): JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Shafi Texcel Limited (STL) at ‘BBB/A-3’ (Triple B/A-Three). Outlook on the assigned rating is ‘Stable’.

FY12 was a challenging year for textile sector on account of relatively lower product prices. This coupled with persisting energy crises resulted in pressure on profit margins. However, the trend reverted in 1H13 with higher demand of cotton yarn from importing economies, mainly China.

The sales mix of STL mainly comprises greige fabric and yarn dyed fabric with former comprising larger proportion of overall sales. Profitability indicators of STL weakened in FY12, with considerably lower gross margins earned during the period. Capacity utilization also declined slightly relative to the prior year. With reduced level of borrowings, primarily on account of reduced working capital requirement, leverage indicators of the company however registered improvement.

With enhanced focus on export sales of value added fabric along with devaluation of Pak rupee against major currencies, bottom line improved in 1Q13. Overall financial indicators, including FFO to total debt levels have also posted recovery in the on-going year. The company is in the process of installing new yarn dyeing machinery, which will bring efficiency in the production process.

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

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