PACRA Maintains the Entity Ratings of Ahmad Hassan Textile Mills Limited

The assigned ratings of Ahmad Hassan Textile Mills Limited (AHTM) reflect the adequate positioning of the company in the relative universe. The company specializes in the manufacturing of greige fabric, with an installed capacity of 171 looms. The management involves experienced professionals looking after the operations of the company. Since its inception, the company has managed an intact business risk profile. The sales mix comprises local and export sales with a large portion of indirect export sales. The export destinations of the company include the U.S., Europe, and Asia. During 1QFY24, the company reported a revenue of PKR 1,296mln (1QFY23: PKR 1,385mln) due to reduced demand in global markets primarily. The margins of the company witnessed attrition due to an inflated cost structure. Hence, the bottom line of the company was recorded at PKR 17mln (1QFY23: PKR 76mln). The financial risk matrix displays good leveraging, improved working capital management, and weakened coverages. The management expects an improvement in the financial performance with the revival of demand and efficient management of the cost structure. Going forward, with planned BMR, leverage is expected to increase. Hence, prudent management remains vital for the rating. During FY23, textile exports were valued at $16.5 billion as against $19.33 billion, reflecting a 15% year-on-year decline – a downward trend seen since the beginning of FY23. Exports declined due to higher energy prices, cotton shortages, and uncertainty in foreign exchange rates. Taming the demand represented by export routes was also a challenge.
The ratings are dependent upon the management's ability to capitalize on growth opportunities in a competitive landscape, operate at an optimal level, and improve margins and coverages, going forward. The company is expected to adhere to conservative financial discipline, which would be crucial to ratings.

About the Entity
Ahmad Hassan Textile Mills Ltd., a listed concern, commenced operations in 1989. The Company is engaged in the manufacturing of greige fabric. AHTM operates with 171 looms, respectively. The Company caters to its power needs via WAPDA, Gas connections, and as well as in-house production. The majority stakes (57%) of the Company are held by Mr. Javed’s family. The overall control of the Company vests in a seven-member board of directors with the Chairperson – Mrs. Salma Javed and the CEO – Mr. Muhammad Haris. Five members are from the sponsoring family. Three members are non-executive directors, two directors carry the executive role and two are independent directors. Mrs. Salma Javed serves the role of Chairperson. The board members have diversified experience and a relatively long association with the Company. Mr. Muhammad Haris, a textile industry veteran, has diversified experience. He is supported by a team of seasoned professionals.