November 15, 2018 (MLN): JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed entity ratings of ‘AA-/A-1’ (Double A Minus/A-One) to Artistic Milliners (Private) Limited (AML). Outlook on the assigned ratings is ‘Stable’.
According to the rating agency, the long Term Rating of ‘AA-’ reflects high credit quality, strong protection factors, and moderate risk but may vary slightly because of economic conditions. Short Term Rating of ‘A-1’ indicates high certainty of timely payment, excellent liquidity factors supported by good fundamental protection factors and minor risk factors.
AML is undergoing/completed expansions in spinning, fabric and garment divisions due to growing demand of denim products. Assigned ratings incorporate extensive experience of sponsors and strong franchise enjoyed by AML in the denim sector.
Assigned ratings take into account moderate business risk profile of the denim industry supported by stable and growing demand for denim products. However, local and international expansion by major players is expected to keep pricing power and hence margins slightly under pressure.
Given the favorable policies & incentives of the government on enhancing exports and imposition of duties on Chinese exports to USA, there is significant opportunity for denim exporters to enhance exports. In this regard, AML is well positioned to tap this opportunity given the ongoing and completed expansion in all three segments.
Going forward, the company plans to diversify in the renewable energy segment. In this regard, the group has signed LOI for investment in Solar and Hydel power project.
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