PACRA Maintains Entity Ratings of Glamour Textile Mills Limited

Pakistan’s yarn production declined by ~8.1% to ~2.5mln MT, while, export volumes showcased growth of ~25.6%, valuing ~USD 956mln (PKR 272bln), due to PKR depreciation during FY24. Economic recession and floods affected the cotton crop, depleting raw material availability and leading to higher yarn prices. However, during FY25, it's estimated that better quality and increased quantum of local cotton may supplement import substitution. However, the uplift of subsidized rates on energy tariffs, surge in tax burden, and PKR fluctuation remain a serious concern for the industry. Thus, placing the industry's outlook on a watch.
Glamour Textile Mills Limited's ('Glamour' or 'the Company’) ratings reflect sponsors' acumen in the leather garments and spinning segments. The Company mainly operates in the local market and holds an adequate market by housing 42,384 spindles compared to the industry’s installed capacity of ~13.4mln spindles. The revenue stems from trading imported fibre, and manufacturing and selling carded yarn of cotton and viscose blend from coarse to super fine counts (coarse | 1s –20s, medium | 21s –34s, fine | 36s –47s & super fine | 48s–80s). Despite sluggish demand for yarn during the economic slowdown, trading income led the overall revenue to post a growth of ~55%. However, procuring raw materials at a higher cost, tied to inflated interest rates and heightened tax burden impacted the Company's overall performance. The margins remain squeezed. On the financial risk front, capital structure is adequately backed by retained earnings. Borrowings – from JS Bank and Soneri Bank - remain in line with the working capital requirements. For Banks' margin cover, the sponsors pouch in their cash, as per management's representation. Glamour's cash flows are stressed creating pressure on the coverages. The Company requires a strategy revamp and concrete efforts to curtail energy-related costs. Incorporating best practices through an improved governance framework and stringent internal control mechanisms may benefit the Company.
The ratings are dependent on the Company’s ability to sustain operations and capacity utilization in the prevailing conditions. Strict adherence to debt matrix along with maintaining cashflows and coverages at an adequate level remains imperative. Also, the impact of elevated energy tariffs on the Company’s margins and in turn profitability needs to be observed.

About the Entity
Glamour Textile Mills Limited ('Glamour' or 'the Company') was incorporated under the repealed Companies Ordinance 1984 (now the Companies Act, 2017) on Sept-91 as a listed concern. The Company was delisted in May-18. Ownership of the Company resides among Elahi family. Mr. Asad Elahi and Mr. Azhar Elahi, directly and through their families, holds an equal stake of ~29% in the Company. While, Mr. Ather Javed Elahi and family holds ~28% stake. The remaining stake resides with Mr. Mansoor Elahi and his family. The Board is family dominated, chaired by Mr. Asad Elahi. While, the Company is managed by Mr. Azhar Elahi as the CEO.