The Pakistan Credit Rating Agency Limited
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Uswa Sikandar

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PACRA Maintains Entity Ratings of Stylers International Limited

Rating Type Entity
(23-Oct-23 )
(24-Nov-22 )
Action Maintain Initial
Long Term A A
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

Stylers International Limited, a prominent textile venture of the US Group, operates alongside other group companies under the flagship Holdco, AJ Holdings. Business oversight is provided by sponsors, while professional and experienced management leads individual companies. The company follows its established strategic direction. Management comprises seasoned professionals who benefit from comprehensive reporting, ensuring autonomous supervision of company operations. The assigned ratings find assurance in Stylers International's association with the US Group. In 9MFY23, the company achieved sales revenue of PKR 10.8bln, marking an 11.3% increase from the corresponding previous period. The majority of this revenue is derived from export sales, accounting for 98% of the total. Key export destinations during 9MFY22 included the US and various European countries such as Spain, Germany, and France. All exports are conducted through LCs and other financial documents. Stylers International maintains a favorable capital structure and strong coverages, indicating a robust financial profile. The company’s capacity utilization dwindled to ~55% in the latest period owing to subdued demand in export markets, also reflected by a decline in dollar-denominated earnings. However, management is hopeful that the demand will pick up from January 2024 onwards. 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 a 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
Stylers International Limited was incorporated in Pakistan as a Private Limited Company on November 27, 1991, under the Companies Ordinance, 1984 (Now the Companies Act, 2017) and was converted into a Public Limited Company with effect from 21 May 2021. The Company is principally engaged in carrying out manufacturing and marketing of ready-made garments and processing services. The Company belongs to a prominent business venture of US Group. Stylers International is a venture of two families. Mr. Mian Muhammad Ahsan owns 3% directly and 36% indirectly through his wife Mrs. Shabnam and Mr. Javed Arshad Bhatti owns 3% directly and 36% indirectly through his wife Mrs. Shama Javed (Late) while the rest is with Naimat Saleem Trust. A Group holding company, AJ Holding Limited, also exists to manage investments in subsidiaries and associated companies and this bodes well for stability. Riaz Ahmad & Co. Chartered Accountants, are the external auditors of the Company. The auditor has expressed an unqualified opinion on the financial statements ending March 31, 2023. The Company’s Board comprises six directors, including the Chairman, Mr. Mian Muhammad Ahsan, it consists of four non-executive members. Mr. Hafiz Mustanser Ahmed is the CEO of the Company. He carries more than 2 decades of professional experience.

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.