The Pakistan Credit Rating Agency Limited
Press Release
a

Rating Action
Lahore: (06-March-2007)
    PACRA Assigns Entity Ratings to
Dewan Farooque Spinning Mills Limited (DFSML)
 

 
Analyst
Sumaira Fazal
(+92-42-586 9504)
sumaira@pacra.com

 

 

 









 




 

 

 

 

 

 

 

 

Disclaimer
This press release is transmitted to you for this sole purpose of dissemination through your newspaper/magazine/agency. The press release may be used by you in full or in part without changing the meaning or context thereof but with due credit to PACRA. However, PACRA has the sole right of distribution of its press releases for consideration or otherwise through any media.

  

The Pakistan Credit Rating Agency (PACRA) has assigned a long-term entity rating of “BBB+” (Triple B plus) and short-term rating of “A2” (A two) to Dewan Farooque Spinning Mills Limited (DFSML). The ratings denote low expectation of credit risk and an adequate capacity for timely payment of financial commitments.

The ratings reflect DFSML’s relatively low business risk compared to most other textile spinning units in Pakistan. This is mainly an outcome of the company’s distinct business model with focus on production of specialty yarn as against regular count yarn, fetching premium pricing. There is also a comparatively low correlation with the domestic textile landscape due to the fact that the company utilizes imported raw material and the bulk of its sales are to export market. Nevertheless, the company faces competition from manufacturers based in other regional countries enjoying economies of scale, and remains exposed to volatility associated with the textile business. At the same time, the company, being in the early stage of its operations, has constrained cash flows mainly due to high finance cost and repayment commitments against long-term borrowings. Meanwhile, the company benefits from its affiliation with a diversified business group.

About the company: DFSML, established in December 2003 and listed on KSE, is an entity of Dewan Mushtaq Group (DMG). The group family members directly hold around 58% ownership in the company. The Group, an established conglomerate in the country, has interests in synthetic fibers, automotive and allied, sugar and allied, textiles, oil and gas, cement, and general trading sectors. It also enjoys the privilege of having business associations with renowned multinational corporations. The company’s plant is located 54km Multan Road, near Phool Nagar Bypass, District Kasur, having production capacity of 28,800 spindles. The company is producing fine count yarn and selling mainly in export market on premium pricing.

While the group Managing Director, Mr Dewan Yousuf Farooqui, is designated chief executive, the Deputy Managing Director, also a member of Dewan family, enjoys complete operational autonomy in the company. He is an MBA, and has attended various orientations on Production Technology, Production Management, Marketing and Finance. A team of highly qualified and experienced professionals assists the DMD.
 
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's 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.

 

    
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