The Pakistan Credit Rating Agency Limited
30-Apr-19
Analyst
Ayesha Qasim
ayesha.qasim@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
- Methodology | Corporate Ratings | Jun-18
- Methodology | Criteria | Rating Modifier | Jun-18
- Methodology | Correlation Between Long-Term And Short-Term Rating Scale | Jun-18
Related Research
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PACRA Maintains Entity Ratings of Allawasaya Textile and Finishing Mills Limited
| Rating Type | Entity | |
|
Current (30-Apr-19 ) |
Previous (28-Dec-18 ) |
|
| Action | Maintain | Initial |
| Long Term | BBB- | BBB- |
| Short Term | A3 | A3 |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
The ratings reflect the adequate business profile of Allawasaya Textile and Finishing Mills Limited (the Company) and its association with three industrial families of Multan and demonstrated support of sponsors. Besides the company, sponsors have presence in the oilseed extraction industry and textile value-chain. The Company is involved in the manufacturing and sale of cotton yarn and man-made fibers. The Company has a small size, low margins and limited profitability. Recent devaluation of Pakistani currency had little impact on the Company’s revenue, since all its sales are made in the local market, which combined with the underutilization of production capacity led to the Company making loss in 1HFY19. Meanwhile, completion of the Company’s BMR is expected to bring in efficiency gains and improved margins. The financial profile of the Company is characterized by moderate leveraging and low coverages. Major share of the debt is short-term; however, long-term debt’s share is rising since the inception of BMR.
The ratings are dependent upon the sponsor support and management's ability to improve margins, profitability and financial profile of the Company. This includes keeping the debt levels manageable and improve the Company's competitive position in the industry.
About
the Entity
Allawasaya Textile and Finishing Mills Limited’s (the Company), is a listed company engaged in manufacturing and sales of different varieties of yarn. The Company currently operates 30,591 spindles in Multan. The company fulfills its energy needs in-house and has a production capacity of 4.2MW. The Company is primarily owned by Mian Tauqir Family (37.6%), Jamil Family (35.4%) and Maqbool Family (25%), while rest is owned by the friends of the families.
Overall control vests in an eleven-member board of directors, which includes four non-executive directors and three independent directors. Three members represent Tauqir family, two members including the Chairman, Mian Muhammad Jamil, represent Jamil family while two members including the CEO, Mian Tanvir Ahmed, represent Maqbool Family. The CEO carries the extensive experience of the textile industry and is supported by an experienced management team.