PACRA Maintains Entity Ratings of Din Textile Mills Limited

The ratings of Din Textile Mills Limited (“Din Textile” or “DTML” or “the Company”) reflect its established presence in the spinning and weaving sectors, the key segments of the overall textile value chain, augmented with state-of-the-art machinery across its spinning, weaving, and dyeing facilities. The Company produces a diversified range of products, including combed compact yarn, core-spun Lycra yarn, slub Lycra yarn, dyed yarn, melange yarn, ply yarn, gassed yarn, knitwear yarn, greige fabric, and bleached cotton web for surgical and cosmetic use. In terms of segment-wise revenue contribution, spinning is the foremost, followed by weaving. The Company's long-term relationship with financially strong clientele strengthens business stability. Driven by favorable pricing dynamics, DTML is strategically reorienting its knitwear yarn business from export to the domestic market.
The Company’s margins witnessed improvement owing to optimized raw material procurement and the integration of 8MW of solar capacity into its energy mix, coupled with reduced finance costs resulting from monetary easing. DTML is further undertaking CAPEX to install an additional ~3MW solar capacity to mitigate the risk of escalating energy costs. A gradual shift in international demand and consumption trends for yarn and greige fabric has been observed, primarily attributable to the global recession and changing customer preferences. The Company's management is focused on addressing these challenges adeptly and has ventured into the stitching segment to serve the export-made-up market, deploying minimal capital expenditure through the utilization of existing infrastructure. This strategy is anticipated to diversify revenue streams by accessing new export markets and enhancing the Company’s sustainability profile. During 9MFY25, the Company’s topline improved to PKR 32.2bln (FY24: PKR 39.6bln, 9MFY24: PKR 29.7bln) on the back of improved local sales. While the financial risk profile is considered adequate, DTML has maintained a highly leveraged capital structure. The Company’s working capital needs are primarily financed through a combination of internally generated cash flows and short-term borrowings. The ratings take comfort from the sponsor's commitment to providing financial support, creating a cushion in the financial matrix of DTML.
The ratings are dependent upon the improvement in cost structure while expanding business volumes. The efficient utilization of short-term borrowings to induce growth in sales plays a pivotal role. Adherence to the debt matrix, generating sufficient cash flows and maintaining coverages at an optimal level is a prerequisite for assigned ratings.

About the Entity
Din Textile is a public limited company, incorporated in 1988. It is engaged in the manufacturing and sale of yarn and griege fabric. The Company’s operational spectrum encompasses spinning, weaving, and dyeing. The overall control of the Company vests in a nine-member board chaired by Mr. Shaikh Muhammad Jawed. The CEO, Mr. Shaikh Muhammad Tanveer, manages the day-to-day operations of the Company, supported by a team of experienced professionals.