PACRA Maintains the Entity Ratings of Yunus Textile Mills Limited

The ratings reflect the strong presence of (“YTML” or “the Company”) in the competitive textile landscape. This stems from its remarkable history as a leading exporter with strategic diversification in all aspects of the textile value chain from Spinning to Home Textile products. In segment-wise business contribution, Home Textile is the foremost segment. The Company offers top-quality products like Comforter sets, Duvet sets, Quilts, Sheet sets, Shower curtains, Window curtains, and Decorative pillows. The Company’s top clients and suppliers are stable entities, strengthening the sustainability profile. The Company has already installed ~23.95 megawatts of solar power plant and is in the process of setting up wind turbines for ~24 megawatts to manage escalated energy cost risk. YTML has executed the majority of its CAPEX over the last three years and now possesses sufficient capacity to clinch future demand. The Company’s topline is predominantly vested with export sales and has consistently grown over the preceding years amidst industry-specific challenges. The Company has gone through several economic cycles but the growth remained intact. During 9MFY24, the Company’s topline surged by 17.7% YoY basis and stood at PKR 55.9bln (9MFY23: PKR 47.4bln). YTML has devised a business strategy specific to the timing of raw cotton procurement, which has augmented the gross margin over the years. The Company rationalizes its debt policy by entirely unloading short-term borrowings to mitigate prevailing inflated finance costs, thereby enhancing net margins and the profitability matrix. The other income generated from the strategic and capital market investments has supplemented the bottom line. The Company secured a bottom line of PKR 10.6bln (9MFY23: PKR 10.0bln). The Company's financial risk profile is considered strong. The working capital requirements are primarily met through internally generated cash flows with comfortable coverages. The Company has maintained a low-leveraged capital structure with a strong equity base. The ratings take comfort from the Company’s association with a well-established business group operating in the Textile, Energy, and Real Estate sectors.
The ratings are dependent on the Company’s ability to sustain its product diversity and volumetric growth while maintaining margins and profitability matrix at an optimal level. The maintenance of the debt matrix and sustainability of coverages coupled with continuity in generating cashflows from core operations has supplemented the assigned ratings.

About the Entity
Yunus Textile Mills Limited (YTML) was incorporated in April 2007 as a public unlisted company. It operates under the umbrella of the Yunus Brother Group (YBG). The sponsoring group is one of the biggest conglomerates in Pakistan with diversified interests in textile, building materials, real estate, power generation, chemicals, pharmaceuticals, FMCG, philanthropy, and automotive. The Group was established in 1962 as a trading house and grew rapidly over the years. The Company has an eight-member board with the presence of sponsors and their families. The board is chaired by Mr. Muhammad Ali Tabba. He possesses more than three decades of professional experience. He is serving as the CEO of Lucky Cement and plays a pivotal role in providing a strategic vision to ICI Pakistan Limited as its Vice Chairman. Mr. Muhammad Hassan Tabba has been designated as the CEO of the Company. He is supported by a team of highly qualified and seasoned professionals.