PACRA Maintains Entity Ratings of Al-Rahim Textile Industries Limited

Al-Rahim Textile Industries Limited (‘Al-Rahim’ or ‘the Company’) is primarily engaged in the manufacturing of towels and fabrics. Established in 1991, Al-Rahim is a leading home textile manufacturer and exporter from Pakistan with a modern, state-of-the-art plant & machinery to produce quality products including towels, bedding, and kitchen linens. Constructed over an area of 38 acres of land in Nooriabad, the mill has a semi-vertically integrated setup that allows all production within the premises and contributes towards efficiency. Over the period Al-Rahim has gone through different phases of capacity expansions in air-jet terry weaving, yarn-dyed & jacquard towel manufacturing, terry and fabric dyeing, printing, and Stitching. Al-Rahim has developed a strong customer base which is among the company's greatest assets. The company aims to provide the highest quality product to achieve customer satisfaction through innovation, commitment, integrity, and efficiency. Al-Rahim Textile Industries has valid certificates for its products and facilities and is periodically audited by internationally recognized certification bodies including Oeko Tex 100 Class-I and Class-II, BSCI, C-TPAT, Sedex, GOTS, SCAN, BCI, Egyptian Cotton Gold Certificate, GRA, RCS, Cradle to Cradle, Made in Green, EcoLabel and BRC. The management asserts to have ~9% market share. The Country's textile exports have witnessed a decline of ~15% in FY23 and stood at $16bln as compared to $19bln in FY22, whereas towel exports contributed ~6% (value wise) of it. However, in dollar terms, the exports stood at USD~1bln in FY23 as compared to USD~1.1bln in FY22 reflecting a decline of ~10%. There was a decline of 11% in towel volume exports in FY23 compared to FY22. As per the audited accounts, the company’s topline clocked in at ~PKR 25,935mln out of which ~PKR 23,222mln from the exports sales and ~PKR 3,184mln from the local sales, reflecting growth of ~15.2% on a YoY basis mainly due to price inflation and Pak Rupee depreciation. Moreover, the company margins are largely sustained at all levels. Sponsors have a good understanding of the business and they are actively involved in all business decisions. Key pillars of business strategy are maintaining a diversified customer portfolio with a lower concentration and also producing the complete range of terry towel products. The Company's financial risk profile is characterized by robust coverages, cashflows, and a comfortable working capital cycle. Capital structure is leveraged and mainly comprised of short-term borrowings for working capital management.
The ratings are dependent upon improvement in market share, optimal operations, sustaining growth in top-line, and retaining sufficient margins while maintaining financial risk at a low level is important. Meanwhile, strengthening the governance framework for better oversight of strategic affairs is considered essential.

About the Entity
Al Rahim Textile Industries Limited (Al Rahim) traces its roots to Al Rahim Textile Industries, which operated in the textile industry as a sole proprietorship since 1991. To strengthen the corporate structure, a public unlisted company was formed by the name of Al Rahim Textile Industries Limited in July 2019. The board comprises three members of the Saya Family. Mr. Faisal Rahim Saya (Son of Mr. Abdul Rahim) manages the overall business affairs of Al Rahim as CEO.