PACRA Maintains Entity Ratings of Liberty Mills Limited

The rating of Liberty Mills Limited (“the Company” or “LML”) emanates from the prominent profile of the Company in the textile industry of Pakistan. The Company is a family-owned truly vertically integrated textile unit that operates under the umbrella of Liberty Group and is considered a flagship Company. LML product slate vest in three business segments which include Home Textile, Health Care Textiles & Apparel. Home Textile is LML's top-performing business segment in terms of revenue contribution followed by Health Care Textile and Apparel. The Company has generated a revenue of PKR 53.92bln as of 9MFY24 (FY23: PKR 62.7bln) mainly supplemented by a volumetric surge in the Home Textile and Health Care Textile products category. The Company's emphasis on the well-defined niche of quality-conscious institutional purchasers has resulted in customer concentration, long-lasting relationships with high-profile clients, and consistent quality that aids in risk management. Over the years, the company has executed CAPEX to enhance the capacities of its spinning and weaving segments, creating a buffer in the supply chain management framework. Additionally, the company has installed a Wind Turbine Solar Hybrid Project for Nooriabad Complex. The installed capacity of this project is 9MW Wind, 3.56MW Solar and 4MW Battery. These systems are the best choice for renewal energy to ensure sustainability because of higher generation capacity compare to singly installed system. It is vital for any large scale manufacturing industry to ensure availability of sustainable power sources at competitive prices. The financial risk profile of the company is considered moderate as the company maintains comfortable cashflows and adequate coverages. The working capital requirements are mainly fueled through short-term borrowings followed by internally generated cashflows. The trade receivables have slightly stretched the working capital management of the company. The company has maintained a leverage capital structure dominated by subsidized borrowing from SBP. LML gradually expanded its footprint through strategic investments in the power sector to beef up its business diversity. Further, other group companies Pakistan Aluminum Beverages Can Limited and Oncogen Pharma (Pvt.) Limited are fully operational. Furthermore, the Company is committed to staying at the forefront of technology and to achieve this, Management has decided to obtain the license for Oracle Fusion Cloud ERP Application.
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
Liberty Mills Limited (LML) is an unlisted, public limited concern incorporated in 1964. Liberty Mills is engaged in the business of manufacturing and processing textile fabrics and made-ups. the company operates a spinning unit with 11,160 rotors/spindles with a production capacity of 1,700 bags per day and Air Jet & Sulzer weaving unit of 145 & 110 looms with a production capacity of 130,000 meters of fabric per day in the Nooriabad & Karachi locations. Liberty Group holds a ~90% stake in Liberty Power Tech Limited (a 200MW thermal IPP) including ~29% through Liberty Mills. Liberty Wind Power 1 Limited and Liberty Wind Power 2 Limited (of 50MW each) are wholly owned subsidiaries of the company and are operational. The BOD comprises seven members mainly of the Mukaty family which includes five executive directors and two non-executive directors.