The Pakistan Credit Rating Agency Limited
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Iram Shahzadi

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PACRA Assigns Initial Entity Ratings to Crown Textile

Rating Type Entity
(16-May-22 )
Action Initial
Long Term BBB-
Short Term A2
Outlook Stable
Rating Watch -

Crown Textile's export-oriented textile unit is primarily involved in production and sale of Men's, Ladies and Children's knitted garments. Currently, Crown Textile is engaged with and supplying directly to majority of private and famous retail brands with several export destinations, 80% from US and 20% from UK and European countries. The Company enjoys long-term associations with several esteemed brands abroad namely KHQ Investment LLC, Puma, SportLife Brands LLC, Terramar Sports Inc. and many others. The ratings derive strength from robust growth in topline in the recent year largely emanating from higher volumetric sales. While gross margins decreased due to largely stagnant average selling prices amidst competitive export market, and increase in cost of sales. The Company has a good financial profile characterized by healthy coverages, moderately leveraged capital structure and improving working capital management. Going forward, Unit 3 of the Company will be operational in Jun22 which will bring in efficiency gains and improve margins. The affair of the Company are being overseen and manage directly by the owner of the Compnay.

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.

About the Entity
Crown Textile (Crown) began as a very small business in 2000 as a single-member company. The Company is principally engaged in the manufacturing and export of knitted garments. Crown produces more than 4mln ready-made garments every month including 50,000kgs knitted raw fabric per day also 50,000kgs dyed fabric per day. Salahuddin & Co. Chartered Accountants, are the external auditors of the company. They have expressed an unqualified opinion on the financial statements of the company for the year ended June 30th, 2021.

The ownership of the Company rests with the family of Mr. Muhammad Nadeem. The major shareholding of the Company is owned by Mr. Muhammad Nadeem (98%) and rest is with his wife. The position of CEO is vested with Mr. M. Nadeem. Mr. Nadeem - B-COM - has an experience of more than 3 decades in the textile industry.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.