PACRA Upgrades Entity Ratings of Ahmed Fine Weaving Limited

The ratings of Ahmed Fine Weaving Limited (Ahmed Fine Weaving) reflect its improving business profile emanating from growth in revenues and profitability. Ahmed Fine Weaving is a family owned public unlisted company with adequate weaving capacity. Currency devaluation and subsidized rates for electricity and gas, boded well for the core operations resulting in better margins. The management's focus on efficiency has strengthened performance by expanding volumes and diversifying its product profile. This has been achieved through consistent BMR activities in recent years. The Company’s management is cognizant of textile industrys volatility and has planed phase wise up gradation of machinery to remain competitive. The Company enjoys strong financial profile characterized by, efficient working capital cycle, strong coverages and intermediately leveraged capital structure. The governance framework can be further strengthened. The expansion projects have been financed through SBP loans with concessionary rates, which provides comforts amidst high interest rate scenario.
The ratings are dependent on the management’s ability to uphold the entity’s performance trend. Meanwhile, maintaining strong margins and coverages to fulfill financial obligations will remain critical. Improvement in governance framework is considered important.

About the Entity
Ahmed Fine Weaving, was incorporated on July 6th 2012 as a public unlisted company. In January 2016, weaving segment of the Company was de-merged form Ahmed Fine Textile Mills into Ahmed Fine Weaving Limited. This separation was done through a scheme of arrangements. All assets, liabilities, agreements, arrangements and other matters relating to the weaving business were transferred to and vested in the Company. The Company currently operates with two weaving units with a total of 264 Air Jet looms.

The ownership of Ahmed Fine Weaving rests with the family of Mr. Ashar Fazal including his mother and children. The Company’s board of directors comprises three members. Two members belong to the sponsoring family, while one member is an executive director. Sponsoring family dominance and absence of independent oversight indicates room for improvement in the governance framework of the Company. Mr. Ashar Fazal - the Chairman of board, is also the CEO of the Company.