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PACRA Maintains Entity Ratings of Din Textile Mills Limited

Rating Type Entity
(08-Sep-22 )
(08-Sep-21 )
Action Maintain Initial
Long Term A- A-
Short Term A2 A2
Outlook Stable Stable
Rating Watch - -

Din Textile, a publicly listed company is a group concern of Din group – one of the leading business groups established in 1954 having a presence across various sectors including textile, dairy, poultry, and real estate. Over the years, since its commencement, the spinning unit of the company comprise of 124,608 spindles while the weaving unit 144 looms. The spindles and looms are of advanced technology, hence are operationally efficient. The ratings incorporate the Company’s improving business profile where the revenue is emanating from two segments - spinning and weaving. The Company's spinning product portfolio comprises combed compact yarn, core spun lycra yarn, slub lycra yarn, dyed yarn, melange yarn, ply yarn, gassed yarn, and bleached cotton web for surgical and cosmetic use while the weaving product portfolio comprises greige fabric. The management is planning to further diversify the revenue stream. The company has improved performance over the quarters. During 9MFY22, the Company's revenue grew by 81% (9MFY22: PKR 22,483mln; 9MFY21: PKR 12,385mln) due to concerted management efforts toward increased profitability. The Company majorly draws its revenue from local sales with exports fluctuating at around 32% of the total revenue. Margins and net income have improved on account of better prices accompanied by higher operational efficiency. During FY22, Pakistan's textile exports surged to $19.3bln (recording a growth of 26%). Exports grew owing to increased volumetric growth of (16% YoY) in the value-added segment, a steep rise in global demand, and record high cotton prices. Under the value-added category, the knitwear segment remained the top performer by posting 34% YoY growth in exports to $5.1 billion in FY22 due to a sharp rise in global demand, especially in the US and European countries. Other value-added segments such as ready-made garments, bed wear, and towel posted YoY growth of 29%, 19%, and 19% to $3.9 billion, $3.3 billion, and $1.1 billion respectively. However, a slowdown is expected in textile demand amid burgeoning inflationary pressures in the exporting destinations, especially in the US and European countries.
The ratings are dependent on improving business profile under the current economic conditions; and a strong financial profile with healthy coverages. Improving capital structure while growing business profile remains critical for the Company.

About the Entity
Din Textile Mills Limited (Din Textile or DTML) is a public limited company, incorporated in 1988. Din Textile Mills Ltd is engaged in the manufacturing and sale of yarn. Its product portfolio comprises of combed compact yarn, core spun lycra yarn, slub lycra yarn, dyed yarn, melange yarn, ply yarn, gassed yarn, and bleached cotton web for surgical and cosmetic use while weaving product portfolio comprises of greige fabric. The overall control of the Company vests in a nine members’ board with Shaikh Muhammad Muneer as Chairman. Three are non-executive directors, three are executive directors while three members are independent directors. Shaikh Muhammad Tanveer manages day to day operations as CEO of the Company. He is supported by a team of experienced professionals.

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.