Pakistan Credit Rating Agency Limited maintains entity ratings of Prosperity Weaving Mills Limited

Lahore, December 29, 2015 (PPI-OT): PACRA has maintained the long-term and short-term entity ratings of Prosperity Weaving Mills Limited at ‘A-‘ (Single A Minus) and ‘A2’ (A Two), respectively. These ratings denote a currently low expectation of credit risk. The ratings reflect Prosperity Weaving’s adequate business profile. With reasonably diversified geographical presence, the company managed to tap new market maintaining business volumes.

The company, while expecting efficiency gains on the back of technology improvement, has lately consolidated its production capacity. Amid suppressed domestic textile sector fundamentals, the revenues and margins have been significantly impacted in the recent years. Financial risk remained stretched owing to (i) additional debt acquired for plant refurbishment, and (ii) present decline in operating cash flows, impacting the company’s debt servicing ability, in turn, constrained coverages. Nevertheless, the ratings draw comfort from Prosperity’s good financial management, seasoned management team, and its association with Nagina Group.

The ratings have been assigned ‘Negative Outlook’ signifying pressure on financial risk profile. While improvement in business margins is important, prudent debt management is required to maintain ratings at current level. In the absence of incremental cash flows, any new debt accumulation, thereby further weakening in coverages, would translate into downward ratings revision.

For more information, contact:
Hammad Rashid
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com