PACRA Maintains Entity Ratings of Latif Textile Mills (Pvt.) Limited.

The assigned ratings of Latif Textile reflect the adequate positioning of the Company in the relative universe. The Company is a manufacturer and exporter of Yarn and Towels, having both Open-end and Ring Spinning technologies for yarn and end-to-end weaving to stitching facilities for towels. The installed capacity is 20,160 spindles and 3,960 rotors along with 104 terry looms for towel weaving. The board comprises two members and both are from sponsoring families. The Company’s management involves experienced professionals looking after the operations of the Company. During FY23, the Company’s revenues stood at PKR 3,239mln (FY22: PKR 4,093mln). The sales composition, predominantly export-oriented, witnessed a shift away from local sales. Net profit margin declined during the period under review primarily stemming from the spinning segment's underutilization, which faced intermittent closures due to issues related to the availability of gas. The financial risk matrix depicts that the company’s leveraging decreased due to an increase in the equity base by PKR 330mln (FY23: PKR 1,790mln, FY22: 1,460mln). Total borrowings, however, registered an increase of PKR 120mln (FY23: PKR 1,181mln, FY22: PKR 1,061mln) to support ongoing expansions in the spinning sector. Effective management of receivables and working capital days emerges as imperative for the company's sustained operational efficiency. Efficient cost management, particularly in the domain of energy and financial expenditures, remains crucial. 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 upon the management's ability to capitalize on growth opportunities in a competitive landscape, operate at optimal levels, and improve margins, going forward.

About the Entity
Latif Textile was incorporated in 1985 as a private limited company. The principal business activity of the Company is the manufacturing of towels through end-to-end weaving and stitching facilities. The Company’s ownership solely lies with the sponsoring family where the families of three brothers namely Mr. Younus Haji Latif, Mr. Junaid Haji Latif, and Mr. Amanullah Haji Latif (Late) hold an equal shareholding of 33.33% each. The CEO, Mr. Jawwad Junaid, belonging to the sponsoring family, is a foreign graduate who possesses textile expertise and has future-oriented goals for the Company. He is assisted by a professional and experienced management team.