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Cotton yarn producer Kunjah Textile's ratings upgraded to BBB
22 Dec '06
2 min read
JCR-VIS Credit Rating Co Ltd has upgraded the medium to long-term rating of Kunjah Textile Mills Limited from BBB- (Triple B Minus) to BBB (Triple B) while maintaining the short-term rating at A-2. The outlook on the medium to long-term rating is 'Stable'
The rating action takes into account the emphasis of the management and the sponsor's to strengthen the financial position of the company through a combination of equity injections, disinvestment from non-earning assets and using internal cash flow generation to carry out a BMR exercise designed to increase production by around 10%.
The company has also posted strong improvement in sales and operating profitability indicators since FY2003, although net profits came under pressure in FY2006, mainly as a consequence of the rising interest rates and cyclical pressure on gross margins. The company plans to issue a TFC shortly to enable it to re-profile its existing debt and create some fiscal space so that it may implement its BMR plans while containing long-term debt at current levels.
Kunjah Textile Mills Limited is a Public Limited Company incorporated in the year 1991 under the Companies Ordinance 1984 and engaged in the production of Cotton Yarn for knitting and weaving industry both for local and export markets.
The rating action takes into account the emphasis of the management and the sponsor's to strengthen the financial position of the company through a combination of equity injections, disinvestment from non-earning assets and using internal cash flow generation to carry out a BMR exercise designed to increase production by around 10%.
The company has also posted strong improvement in sales and operating profitability indicators since FY2003, although net profits came under pressure in FY2006, mainly as a consequence of the rising interest rates and cyclical pressure on gross margins. The company plans to issue a TFC shortly to enable it to re-profile its existing debt and create some fiscal space so that it may implement its BMR plans while containing long-term debt at current levels.
Kunjah Textile Mills Limited is a Public Limited Company incorporated in the year 1991 under the Companies Ordinance 1984 and engaged in the production of Cotton Yarn for knitting and weaving industry both for local and export markets.
JCR-VIS Credit Rating Co Ltd
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