JCR-VIS Credit Rating Co Ltd (JCR-VIS) has reaffirmed the medium to long-term rating of Kunjah Textile Mills Limited (KTML) of BBB (Triple B) and the short-term rating at A-3. The outlook on the medium to long-term rating is 'Stab1e', says a press release.
The rating re-affirmation is based on the sponsor's commitment to inject equity in the company by March 2008 to help ease the liquidity pressure on the company arising from the narrowing margins being experienced by the textile spinning industry in FY-2008 as they are unable to sufficiently pass on increase in cotton prices to their customers due to global competitive pressures, the release said.
Further, JCR-VIS has taken into account the steps taken by the management with respect to balance sheet restructuring during FY2008 and the steps being taken to reduce inventory levels to control the rising financial expenses at the company which are stressing the bottom line despite strengthening of core operations, it added.
JCR-VIS shall continue to monitor the impact of compressing margins on the company's financial position as well as the progress being made on the above-mentioned factors, which would mitigate the issue. JCR-VIS is further monitoring the impact of the current political and law and order situation of the country and rating actions will be updated as and when required.-PR
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