JCR-VIS has maintained the rating of Gulshan Spinning Mills Ltd, and Gulistan Textile Mills Ltd, after reviewing the performance of their financial results for 2003 and first quarter ended December 2004.
The rating agency has reviewed the performance of Gulistan Textile Mills Limited (GTML), Gulshan Spinning Mills Limited (GSML) and Paramount Spinning Mills Limited (PSML) for FY2003 and 1Q FY2004.
Our assessment indicates that although there is improvement in profitability and cash flows of these companies on a year on year basis, but the same have not improved to the extent expected at the time these TFCs were issued which is a prime rating concern.
The above-mentioned issues affect a key part of our original rating rationale for the three companies.
However, JCR-VIS has decided to maintain the existing rating of A assigned to GTML and GSML's TFC issues and A+ assigned to PSML's TFC issue in view of the fact that the call option of the TFC issues becomes exercisable in January 2005.
JCR-VIS believes that there is a high likelihood that the group management will call the TFC issues in view of the appreciable difference between the TFCs floor rate and prevailing rates for long-term funds.
The Group should be able to easily arrange the replacement funds needed to exercise the call option due to the current appetite of financial institutions for fresh credit.
JCR-VIS will closely monitor developments at the three companies and keep the public informed accordingly with respect to their impact.
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