VIS Reaffirms Entity Ratings of Indigo Textile Private Limited - Press Release issued by VIS Credit Rating Company Limited.

Karachi -- May 25, 2023 (PPI-OT)

Following is the text of press release issued by VIS Credit Rating Company Limited

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VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Indigo Textile (Private) Limited (ITPL) at 'A/A-1' (Single A/A-One). Medium to long-term rating of 'A' denotes good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. Short-term rating of 'A-1' indicates high certainty of timely payment, liquidity factors are excellent and supported by good fundamental factors. Risk factors are minor. Outlook on the assigned rating is 'Stable'. Previous rating action was announced on April 25, 2022.

Ratings incorporate extensive experience and industry presence of sponsor groups, along with the company's 20-year track record in the denim sector, including operations such as rope-dyeing, weaving, and finishing. Consistent growth in production and export volumes, sizeable revenue increase over the years, and healthy profitability leading to an upward trend in capitalization further support the ratings. Additionally, strong export orientation and almost entire yarn procurement sourced locally are viewed positively.

Ratings reaffirmation takes note of considerable improvement in margins and cash flows in the current fiscal year while reduced working capital days indicate improved liquidity profile. Leverage ratios remain satisfactory given limited debt levels. Business risk profile takes into account industry wide growth in exports in FY22; however, recent floods across the...