PACRA Maintains Entity Ratings of Tata Textile Mills Limited

Tata Textile Mills Limited – a public listed company - primarily engaged in the manufacturing and sale of different varieties of yarn is majorly owned by Mr. Anwar Tata's group. Tata group currently owns three textile mills i.e. Island, Salfi and Tata Textile Mills Limited. The group is also diversified into power and food sectors. Spinning industry has recently suffered as lower demand for cotton yarn from China owing to trade war with USA has led to lower exports volume. Tata Textile's margins and, in turn, profitability have deteriorated, when compared to peers, as the Company had to divert its sales to local market.The ratings of Tata Textile reflect the financial risk profile of the Company, which is characterized by moderate leveraging, strong coverages - despite high interest rates and adequate working capital management. Long association of experienced and professional management team adds comfort. Going forward, management is planning to merge all three textile entities in order to benefit from the economies of scale.
The ratings are dependent on improving business margins while maintaining financial risk at low level. Prudent management of short-term liquidity and sustained coverages are important. Going forward, materialization of successful merger of all three textile entities would be rating essential.

About the Entity
Tata Textile Mills limited, incorporated in 1991 and a Public Listed Company, is engaged in the manufacturing and sale of different varieties of yarn. In early 90s, TATA group setup Tata Textile Mills Limited as part of expanding its emerging business base. The corporate office of the Company is located at Textile Plaza, M.A. Jinnah Road, Karachi, whereas, vicinity of the plants is in District Muzaffargarh, in the province of Punjab. The Company is operating 2 manufacturing units with a combined capacity of 44,400 spindles.

The CEO, along with other family members and associated companies collectively own majority (~67%) shares of the Company. The remaining shareholding of the Company is held by mutual funds (~11%) and general public (~22%). The overall control of the Company vests in seven members (board of directors) including the CEO – Mr. Shahid Anwar Tata. Currently, the board comprises two executive directors, four non-executive, and one independent member. Mr. Anwar Ahmed Tata is the Chairman of the board. He has diverse experience in the field of textile sector, bringing specialized and comprehensive experience and knowledge on the board.