The Pakistan Credit Rating Agency Limited
08-May-19
Analyst
Muhammad Hassan
muhammad.hassan@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
- Methodology | Corporate Ratings | Jun-18
- Methodology | Criteria | Rating Modifier | Jun-18
- Methodology | Correlation Between Long-Term And Short-Term Rating Scale | Jun-18
Related Research
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PACRA Maintains Entity Ratings of Fazal Weaving Mills Limited, Assigns 'Rating Watch - Developing'
| Rating Type | Entity | |
|
Current (08-May-19 ) |
Previous (24-Jan-19 ) |
|
| Action | Maintain | Maintain |
| Long Term | A- | A- |
| Short Term | A2 | A2 |
| Outlook | Developing | Stable |
| Rating Watch | Yes | - |
The board of directors of Fazal Weaving Mills Limited (Fazal Weaving) and Fazal Cloth Mills Limited (Fazal Cloth) – the parent company – have agreed upon the merger of Fazal Weaving with and into Fazal Cloth. Fazal weaving is a wholly owned (100%) subsidiary of Fazal Cloth. Currently, the transaction is in process of completion. Most of the approvals have already been acquired and the process is in final stage. Post merger, all assets and liabilities of the Company will be transferred to Fazal Cloth. The merger is expected to conclude by end-Jun 2019.
Considering these developments, PACRA has placed the entity ratings of Fazal Weaving on 'Rating Watch - Developing'.
About
the Entity
About Fazal Weaving:
Fazal Weaving – a wholly owned subsidiary of Fazal Cloth – is engaged in spinning business. The Company started commercial operations of yarn in Apr-2014. The Company’s current operational capacity comprises 39,600 spindles. Fazal Weaving has a seven-member board with four representatives of Fazal Group and three representatives of Fatima Group. Herein " Group means members of family without reference to any law of Pakistan".
About Fazal Cloth:
Fazal Cloth, a listed concern incorporated in 1966, is engaged in the manufacturing and marketing of yarn and fabric. The Company operates with seven spinning units (199,044 spindles, 3,660 rotors, 912 MVS spindles and 119 doubling machines) and a weaving unit (224 airjet looms). The Company’s majority stakes are owned by Fazal Group and Fatima Group (~45% each). The remaining shareholding rests with financial institutions (~6%) and general-public (~4.7%). The Company’s board comprises seven members, including the Chief Executive Officer (CEO). The board has equal representation (three each) of Fazal Group and Fatima Group, while one director is independent director.