The Pakistan Credit Rating Agency Limited
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Muhammad Hassan

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PACRA Maintains Entity Ratings of Nishat Mills Limited

Rating Type Entity
(15-Nov-19 )
(17-May-19 )
Action Maintain Maintain
Long Term AA AA
Short Term A1+ A1+
Outlook Stable Stable
Rating Watch - -

The ratings reflect established position of Nishat Mills as the a premier export-oriented composite unit, with a sizable strategic portfolio and conservative capital structure. The Company enjoy's prominence in textile sector due to wide array of its products, extensive outreach and stable customer base. Meanwhile, the Company’s revenues are consistently on growing trajectory, a factor of continuous BMR activities, which has helped the Company in maintaining its leading position. Currency devaluation in FY19, coupled with incentives for export-oriented units, boded well for the core operations resulting in better margins and profitability during FY19. The diverse and sizable investment portfolio, emanating from the Company's implicit Holdco status within the Group, generates regular divided stream, supporting core income. The volatility in stock market has impacted the investments and equity of the Company in recent times. Nishat Mills continues to maintain a low leveraged capital structure and strong coverages signifying its very strong financial profile. The Company's association with Nishat Group as its flagship entity, remains a key rating factor.
The ratings are dependent on the Company's ability to sustain its core margins and profitability. Preserving low leveraged capital structure and sound coverages remain imperative. Meanwhile, further strengthening the governance framework, in line with best practices is considered important.

About the Entity
Nishat Mills, established in 1951, is the largest textile composite unit and a leading exporter of textile products in the country. The Company’s majority stake (~51%) is owned by members of Mansha family and Nishat Group companies. Nishat Mills also holds shareholding in multiple strategic investments of Nishat Group. Nishat Group – a leading conglomerate – maintains substantial presence in the country's financial sector and strong foothold in textile, cement, power and hospitality sectors. The Group has lately entered the Pakistan's automobile assembly industry through a joint venture with Kia motors.

The board comprises seven members with two directors representing the sponsoring family – including the Chairman – Mr. Hassan Mansha and the CEO. The remaining directors include one independent director, one executive director, while all other members are non-executive directors working with Nishat Group entities. The CEO, Mr. Umer Mansha, has been associated with Nishat Mills since 1994 and carries extensive experience in the textile industry. He is supported by an experienced management team. Moreover, the quality of systems and processes in place is considered very strong.

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.