PACRA Maintains Entity Ratings of US Apparel & Textile (Private) Limited

US Apparel & Textiles (Private) Limited, a significant textile venture within the US Group, operates under the overarching AJ Holdings, the group's flagship holding company. The group consciously avoids leveraging, a strategic decision overseen by sponsors who provide guidance and professional management to group companies. The company is primarily engaged in manufacturing high-quality garments that are exported to the USA, UK, and Europe. With experienced professionals in its management, the company operates autonomously with comprehensive reporting. The business has a robust presence in the broader value chain, allowing it to navigate the textile industry's volatility successfully. The company's steady revenue base in recent years is evident, with FY23 reflecting a 16% YoY growth in revenue, reaching PKR 51.9bln (FY22: PKR 44.7bln). The margins of the company also witnessed substantial growth, whereby the net profit margin reached 17.4% in FY23 compared to 11.7% in FY22. US Apparel maintains a favorable capital structure and strong coverages, indicating a resilient financial profile. During FY23 the country's textile exports decreased to $16.5bln, reflecting a 15% YoY decline. This decline was attributed to factors such as high energy costs, cotton shortages, and foreign exchange rate uncertainties. Value-added products like knitwear, bedwear, towels, and readymade garments witnessed a 13% YoY decline, while basic textiles, including raw cotton, cotton yarn, and cotton cloth, experienced a 21% YoY decrease. Notably, in June 2023, there was a 7% MoM increase in cotton yarn exports, and value-added exports depicted a volumetric increase of 16% on an MoM basis. Knitwear and readymade garments witnessed an 18% and 19% increase, respectively.
The ratings are dependent on the Company's ability to maintain a strong business profile amidst current circumstances. Preserving low-leveraged capital structure and sound coverages remain imperative.

About the Entity
US Apparel & Textiles (Private) Limited was incorporated on February 18, 1987, as a private limited company. The Company is principally engaged in the manufacturing and export of ready-made garments. The Company has five production units. The Company belongs to a prominent business venture of US Group. A Group holding company, AJ Holding Limited, also exists to manage investments in subsidiaries and associated companies and this bodes well for stability. AJ Holding has 100% shareholding of US Apparel & Textiles (Private) Limited. EY Ford Rhodes Chartered Accountants are the external auditor of the Company. The auditor has expressed an unqualified opinion on the financial statements ending Jun 30, 2023. Mr. Muhammad Salman Hafeez Malik is the CEO designate of the Company. He carries twenty-six years of professional experience and is a Chartered Accountant. He has been working with this group since 2019. Mr. Afnan Mansoor, CFO of the Company, has been associated since the year 2009. He is a Chartered Accountant.