VIS Reaffirms Entity Ratings of M.K. Sons (Private) Limited - Press Release issued by VIS Credit Rating Company Limited.

Karachi -- May 29, 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 M.K. Sons (Private) Limited at 'A-/A-2' (Single A Minus/A-Two). Medium to long-term rating of 'A-' signifies good credit quality with strong protection factors. Moreover, risk factors may vary with possible changes in economy. Short-term rating of 'A-2' reflects good certainty of timely payments coupled with sound liquidity and company fundamentals. Outlook on the assigned rating remains 'Stable'. Previous rating action was announced on April 22, 2022.

Ratings continue to incorporate the company's family-owned structure, 35-year operating history, specialization in value-added fabrics, home-textile products, and denim garments, and a diversified client base. Moreover, strong export orientation and minimal reliance on imported yarn or fabric are viewed positively. Ratings reaffirmation reflects strong revenue and capitalization growth, with satisfactory debt coverage metrics throughout the review period. However, recent global demand slowdown, increased operating overheads and escalated finance cost have affected net profitability and cash flows in the current fiscal year. In addition, cash conversion cycle is elevated and leverage ratios though depicted slight improvement remain on the higher side.

Export to local sales breakup has remained consistent at 88:12 in the past two years. Product-wise, home textile made-ups represent more than...