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Fitch Ratings Lanka Ltd (FRL) affirmed the national senior unsecured long-term rating of Hayleys MGT Knitting Mills Limited (HMGT) of BBB+ (sri). Rating Outlook is Stable.

The current rating of BBB+ (sri) indicates that there is currently a low expectation of credit risk. While the capacity for timely payment of financial commitments is considered adequate, adverse changes in circumstances and economic conditions are more likely to impair this capacity.

The rating reflects the sound growth in local and export sales achieved by HMGT and improved prospects for the latter with the company supplying knitted fabrics to a number of globally recognised brands in the recent past.

While operating profitability has slipped as a result of intensified competition and increased prices of raw material, the company has reported sound growth in profits due to increasing sales and growing direct exports on which HMGT usually enjoys better margins.

HMGT recently expanded production capacity by more than 50% to gear-up for the increasing demand for its products.

Presently, the company is the only local knitted fabric manufacturer equipped to produce 100% Polyester based knitted fabrics and has strengthened its position in these products over the years.

The production mix of HMGT is gradually shifting towards more polyester-based fabrics which are expected to drive much of the future growth for the company.

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