The Pakistan Credit Rating Agency Limited
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Iram Shahzadi

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PACRA Assigns Initial Entity Ratings to Yunus Textile Mills Limited

Rating Type Entity
(30-Jun-22 )
Action Initial
Long Term AA-
Short Term A1+
Outlook Stable
Rating Watch -

Yunus Textile Mills Limited (YTML) is a prominent textile venture of Yunus Brother’s Group. The group companies operate under the umbrella of YB holdings - flagship Hold Co of the group. Yunus Brother’s Group has robust financial profile with diversified presence in sectors including power generation, building materials, real estate, textile, chemicals, pharmaceuticals, food and automotive sectors. Sponsors exercise oversight of the businesses and professional management, well-equipped and well-experienced, spearhead the individual companies. Strategic direction is meticulously worked out and rigorously followed once decided and finalized. YTML is amongst the leading home textile exporters in the country. The company has 78,800 spindles and 2,976 rotors installed yielding yarn capacity of 33m kgs. per year, which caters to around ~ 65% of YTML’s yarn requirement. Yunus Textile has a weaving capacity of 98.6m meters per annum and the utilization level for FY21 was reported at 90%. YTML has an installed made-ups (finished home textile products) capacity of 168m meters per year. Utilization level of the home division was reported at 86% in FY21.The Company enjoys established customer base with several export destinations in European Countries and United States of America. The company enjoys strong franchise and is recognized as a quality product manufacturer with product line ranging from bed sheets, comforters, duvets, quilts, and pillow cases to curtains and table linens. The rating reflects a steady revenue base in recent years. The topline primarily consists of exports. Margins remained largely sustained where growth recorded in revenue. YTML continues to maintain Favorable capital structure and strong coverages signifying robust financial profile. During 9MFY22 (Jul21- Mar22), Pakistan textile exports surged to $14.2bln (recording growth of 25%) as compared to $11.3bln in the same period last year. This is attributable to increase in demand for textile products internationally and channeling of export orders towards Pakistani market. On a YoY basis, the exports of raw cotton, cotton (carded or combed) and cotton cloth recorded notable growth. Going forward, the textile sector’s outlook is expected to stay good in the medium term where demand for textile products is expected to sustain.
The ratings are dependent on the Company's ability to sustain its core margins and profitability. Preserving a low-leveraged capital structure and sound coverages remains imperative.

About the Entity
Yunus Textile Mills Limited (YTML) was incorporated in April, 2007 as a public unlisted company. YTML is a part of the Yunus Brother Group (YBG) being a wholly owned subsidiary of YB Holdings (Pvt) Limited. The Yunus Brothers Group (YBG) is one of the biggest conglomerates in Pakistan with diversified interests in textiles, building materials, real estate, power generation, chemicals, pharmaceuticals, FMCG, philanthropy and automotive. The group was established in 1962 as a trading house and then grew rapidly over the years. Currently YBG is one of the largest export houses in Pakistan. The group’s annual turnover including Yunus Textile and its subsidiaries is approximately USD 2.734bln including the annual export turnover around USD 769.21mln. The Company has eight-member board with presence of sponsors and their families. The position of CEO is vested with Mr. Muhammad Ali Tabba. He carries more than 3 decades of professional experience. He also serves as the CEO of Lucky Cement & also plays a pivotal role in providing a strategic vision to ICI Pakistan Limited as its Vice Chairman.

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.