The Pakistan Credit Rating Agency Limited
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Iram Shahzadi

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PACRA Assigns Entity Ratings to Glamour Textile Mills Limited

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

The assigned ratings of Glamour Textile Mills Limited reflect the adequate positioning of the company in the textile spinning industry. The company deals in manufacturing of carded yarn of three blends: Cotton, Polyester cotton & Viscose (Coarse (1s –20s), Medium (21s –34s), Fine (36s –47s) & S. Fine (48s–80s). The Company imports 70% of its cotton from the United States, Brazil, and Africa, with the remaining 30% coming from Punjab and Sindh. The efficiency parameters reflect room for improvement. The ratings incorporate the Company’s moderate yet improving business profile where revenue emanates from a single segment. Further improvement in the control environment remains vital. Management meetings are held regularly with follow-up points to resolve or proactively address operational issues, eventually ensuring a smooth flow of operations. The liquidity profile is underpinned by adequate cash flow coverages in relation to outstanding obligations. The ratings also incorporate a low-leveraged capital structure. The Company’s capital needs emanate from financing inventories and trade receivables for which the Company relies on short term borrowings (STBs). The Company is a family-owned enterprise. It has an eight-member board dominated by the presence of sponsors and their families.
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 the Company’s ability to sustain its operations in prevailing conditions. Excessive borrowing, leading to higher leverage and/or deterioration in coverages, can impact the ratings.

About the Entity
'Glamour Textile Mills Limited (the Company) was incorporated under the repealed Companies Ordinance, 1984 (now the Companies Act, 2017) on September 14, 1991, and was quoted on Pakistan Stock Exchange Limited (PSX). On May 21, 2018, it was delisted by regulation no. 5.13 of PSX. Now it is a public company under the Companies Act, of 2017. The principal business of the Company is the manufacturing and sale of yarn. The Company operates a single spinning unit with 48,720 spindles. Shareholding of the company is distributed among eight family members of “Elahi Family”. Mr. Asad Elahi directly owns 27% and indirectly through his wife and his two sons owns 2%, Mr. Azhar Elahi directly 27% and indirectly through his wife and his son own 2%, Mr. Ather Javed Elahi 26% and indirectly through his wife and his son owns 2% and the remaining is with Mr. Mansoor Elahi and joint stock companies. The position of CEO is vested with Mr. M. Azhar Elahi. Hence, the Chairman of the Company is Mr. Asad Elahi.

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.