The Pakistan Credit Rating Agency Limited
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Sehar Fatima

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PACRA Maintains Entity Ratings of Yunus Textile Mills Limited

Rating Type Entity
(26-Jun-23 )
(30-Jun-22 )
Action Maintain Initial
Long Term AA- AA-
Short Term A1+ A1+
Outlook Stable Stable
Rating Watch - -

Yunus Textile Mills Limited (YTML) is a prominent textile venture of the Yunus Brothers Group. The group companies operate under the umbrella of YB Holdings – the flagship Hold Co of the group. Yunus Brother’s Group has a robust financial profile with a diversified presence in sectors including power generation, building materials, real estate, textile, chemicals, pharmaceuticals, food, and automotive sectors. Sponsors exercise oversight of the businesses and professional management, are well-equipped and well-experienced, and spearhead the individual companies. Strategic direction is meticulously worked out and rigorously followed once decided and finalized. YTML is amongst the leading home textile exporters in the country. The Company consists of spinning, weaving, dyeing, printing, finishing, cutting & sewing. It has 166,160 spindles and 5,016 rotors installed yielding a yarn capacity (on the basis of 20 counts) of 64m kgs. per year, which caters to around ~ 70% of YTML’s yarn requirement. Yunus Textile has a weaving capacity of 126m meters per annum and the utilization level for FY22 was reported at 90%. The Company enjoys an established customer base with several export destinations in European Countries and the United States of America. The company enjoys a strong franchise and is recognized as a quality product manufacturer with product lines ranging from bed sheets, comforters, duvets, quilts, and pillowcases to curtains and table linens. The rating reflects a steady revenue base in recent years. The top line primarily consists of exports. Margins remained largely sustained where growth was recorded in revenue. YTML continues to maintain a Favorable capital structure and strong coverages signifying a robust financial profile.
During 9MFY23, the textile exports were valued at $12.47bln compared to $14.24bln, reflecting a 12% decline YoY - the declining trend has been recorded in the last two quarters. In the month of March, Knitwear, Readymade Garments, Bedwear, and Towels increased by 18%, 13%, 5%, and 2% MoM respectively. Moreover, a slowdown is prevailing in textile demand amid burgeoning inflationary pressures in the exporting destinations, especially in the US and European countries. The demand pattern is expected to improve in the upcoming quarters.
The ratings are dependent on the Company's ability to sustain its core margins and profitability. Preserving a low-leveraged capital structure and sound coverages remains imperative.

About the Entity
Yunus Textile Mills Limited (YTML) was incorporated in April 2007 as a public unlisted company. Yunus Textile Mills Limited (YTML) is a part of the Yunus Brother Group (YBG) a wholly owned subsidiary of YB Holdings (Pvt) Limited. The Yunus Brothers Group (YBG) is one of the biggest conglomerates in Pakistan with diversified interests in textiles, building materials, real estate, power generation, chemicals, pharmaceuticals, FMCG, philanthropy, and automotive. The group was established in 1962 as a trading house and then grew rapidly over the years. Currently, YBG is one of the largest export houses in Pakistan. The group’s annual turnover including Yunus Textile and its subsidiaries is approximately USD 3.6bln including the annual export turnover of around USD 766mln. The Company has an eight-member board with the presence of sponsors and their families. After the death of Mr. Yunus Tabba, the position of chairman is vested with Mr. Muhammad Ali Tabba. He carries more than 3 decades of professional experience. He also serves as the CEO of Lucky Cement & also plays a pivotal role in providing a strategic vision to ICI Pakistan Limited as its Vice Chairman. Muhammad Hassan Tabba is the CEO of YTML. He has an extensive engagement in many Community Welfare Projects.

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.