Sapphire Textile Mills : VIS Credit Rating Company Maintains Entity Ratings of Sapphire Textile Mills Limited - Press Release issued by VIS Credit Rating Company Limited

April 22, 2020 (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 maintained entity ratings of Sapphire Textile Mills Limited (STML) at 'A+/A-1' (Single A Plus/A-One). The assigned ratings have been placed on 'Rating Watch-Developing' status. Long Term Rating of 'A+' reflects good credit quality, adequate protection factors. Risk factors may vary with possible changes in the economy. Short Term Rating of 'A-1' indicates high certainty of timely payment, excellent liquidity factors supported by good fundamental protection factors and risk factors are minor. The previous rating action was announced on December 05, 2019.

The assigned ratings incorporate STML being part of the Sapphire Group of Companies. Sapphire group is amongst the leading textile exporters in the country and has presence across the broader value chain. Ratings also reflect the company's diversified business risk profile with core textile operations being complemented by investment in power sector along with a sizeable portfolio of marketable securities.

Assigned ratings capture sound financial performance and successful operations of 3x50MW wind power project- Tricon Boston Consulting Corporation (Private) Limited (TBCCL). The assigned ratings incorporate STML's historically strong operating performance with capacity utilization of all segments remaining high. Focus remains on value addition and increasing proportion of finished segment in the sales mix.

The revision in rating outlook reflects prevailing uncertainty in textile sector dynamics due to coronavirus outbreak, prolonged lockdown, overall contraction in demand and challenging economic environment. It is expected that the entire value chain of the textile industry will be impacted by these developments. Status of the assigned rating is therefore uncertain as an event of deviation from expected trend has occurred; additional information will be necessary to take any further rating action, warranting a 'Rating Watch-Developing' status. Given the diversified operations and adequate financial profile, it is expected that ratings will remain stable post recovery of the ongoing situation; nevertheless as scenario is evolving rapidly, VIS will closely monitor and will accordingly take action to resolve the outlook status.

For more information, contact:Director Compliance and Rating Analytics,VIS Credit Rating Company LimitedVIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,Phase VII, DHA, Karachi, PakistanTel: [phone]Fax: [phone]Email: [e-mail]: https://www.vis.com.pk/

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