PACRA Maintains Entity Ratings of C.A Textile Mills (Pvt.) Limited

The ratings reflect the modest business profile of C.A. Textile Mills (Pvt.) Limited (C.A. Textile), involved in the manufacturing of cotton and viscose yarn. The Company's revenues have shown growth over recent years, benefiting from increase in local sales volumes on the back of recently completed expansion. However, the profitability of the Company remains thin while margins remain low compared to industrial peers. The Company caters to the needs of local industry and has introduced new products including viscose yarn. However, with the withdrawal of zero-rated status of the textile sector since Jul19, sales to unregistered customers have become a challenge. Thus, the Company has increased focus on sale of cotton yarn. This, coupled with increased interest rates, has put pressure on margins and coverages. Meanwhile, liquidity position is considered adequate while leveraging remains low.
The ratings are dependent on the Company’s ability to improve its margins and maintain prudent working capital and financial profile. Any negative movement in margins affecting the profitability and cash flows will impact the ratings. Meanwhile, improvement in profitability and governance framework will be favorable for the ratings.

About the Entity
C.A. Textile Mills (Pvt.) Limited commenced operations in 2002 as a private limited company in Pakistan. The Company’s head office is in Lahore and its plant located in Sheikhupura. It has total installed capacity of 40,560 spindles. C.A. Textile’s majority shareholding rest with Ch. Salamat Ali (63%) and his family (5%). The remaining stake (32%) is held by Ch. Muhammad Atique Ur Rehman Cheema, former Board member of C.A. Textile Mills and a family friend.

The Board comprises three executive directors, all from the sponsoring family. Ch. Salamat Ali, the CEO of the Company is also the Chairman of the BoD. The management team comprises seasoned individuals with experience of local textile industry.