The Pakistan Credit Rating Agency Limited
07-Apr-21
Analyst
Sehar Fatima
sehar.fatima@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
- Methodology | Corporate Ratings | Jun-20
- Methodology | Correlation Between Long-Term And Short-Term Rating Scale | Jun-20
- Criteria | Rating Modifier | Jun-20
Related Research
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PACRA maintains Entity Ratings of Masood Spinning Mills Limited
| Rating Type | Entity | |
|
Current (07-Apr-21 ) |
Previous (12-May-20 ) |
|
| Action | Maintain | Initial |
| Long Term | BBB+ | BBB+ |
| Short Term | A2 | A2 |
| Outlook | Stable | Stable |
| Rating Watch | Yes | Yes |
Masood Spinning Mills Limited (‘Masood Spinning’ or ‘The Company’) is a public unlisted limited company. The Company is part of Mahmood Group, one of the leading textile conglomerates in the country. The Company is engaged in manufacturing 30 -40 count yarn (coarse yarn) and fine count yarn. The rating reflects a steady revenue base in recent years. The topline primarily consists of exports. The Company's margins have improved lately though remained below par when compared with peers. The financial risk matrix remains adequate with high leveraging and coverages. Merger improvement witnessed in 1HFY21 with an increase in coverage and healthy working capital. Organic growth in the equity base is positive. Going forward, the planned CAPEX is expected to bring in efficiency gains and improve margins.
The Company's association with Mahmood Group and vast experience of sponsors remain important rating factors. The ratings are dependent upon the 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. Sponsor’s support and business acumen remain important for the ratings.
About
the Entity
Masood Spinning is a venture of Mahmood Group, which was originally established in 1935, by entering the tannery business. Now the group has a presence in the complete cotton chain (growing to finished products), tanneries, real estate, and food. Cumulatively the group operates ~300,000 spindles and ~850 looms, out of which 82,272 spindles come under Masood Spinning. Mahmood Group Sponsors cumulatively own 100% shareholding directly and through associated companies.
Overall control vest with seven board members, all of whom are from the sponsoring family. Mr. Khawaja Muhammad Younus is the CEO of the Company and has over four decades of experience in the textile industry. He is supported by a team of seasoned professionals who work under various sub-divisions to ensure efficiency.