The Pakistan Credit Rating Agency Limited
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Iram Shahzadi

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PACRA Assigns Initial Entity Ratings to Stylers International Limited

Rating Type Entity
(24-Nov-22 )
Action Initial
Long Term A
Short Term A1
Outlook Stable
Rating Watch -

Stylers International Limited (Stylers) is a prominent textile venture of US Group. The group companies operate under the umbrella of AJ holdings – the flagship HoldCo of the group. Sponsors exercise oversight of the businesses; professional management are well-equipped and well-experienced, and spearhead the individual companies. Strategic direction is meticulously worked out and rigorously followed once decided and finalized. The Company’s management has experienced professionals, aided by comprehensive reporting, where operations of the Company are supervised with complete autonomy. The assigned ratings derive comfort from Styler International’s association with the US Group. The majority of the sales revenue for the Company comes from export sales, which account for 94.4% of total sales revenue. The main export destinations in FY22 were the US and European countries (Spain, Germany, France). All exports are made through L.C's and other financial documents. Stylers International continues to maintain a favorable capital structure and strong coverages signifying a robust financial profile. Going forward, the State of an Art expansion project (Project Sunshine) is under construction which will enhance the production capacity from the current 9.4M garments gradually to 12M garments per annum. Apart from Project Sunshine, the company will continue capital expenditure on a routine basis. During FY22, Pakistan's textile exports surged to $19.3bln (recording a growth of 26%). Exports grew owing to increased volumetric growth of (16% YoY) in the value-added segment, a steep rise in global demand, and record high cotton prices. Under the value-added category, the knitwear segment remained the top performer by posting 34% YoY growth in exports to $5.1 billion in FY22 due to a sharp rise in global demand, especially in the US and European countries. However, a slowdown is expected in textile demand amid burgeoning inflationary pressures in the exporting destinations, especially in the US and European countries.
The ratings are dependent on the Company’s ability to maintain a strong business profile amidst current circumstances. Preserving low leveraged capital structure and sound coverages remain imperative.

About the Entity
Stylers International Limited was incorporated in Pakistan as a Private Limited Company on November 27, 1991 under the Companies Ordinance, 1984 (Now the Companies Act, 2017) and was converted into a Public Limited Company with effect from 21 May 2021. The Company is principally engaged in carrying out manufacturing and marketing of ready-made garments and processing services. The Company belongs to a prominent business venture of US Group. Stylers International is a venture of two families. Mr. Mian Muhammad Ahsan owns 3% directly and 36% indirectly through his wife Mrs. Shabnam and Mr. Javed Arshad Bhatti owns 3% directly and 36% indirectly through his wife Mrs. Shama Javed (Late) while rest is with Naimat Saleem Trust. A Group holding company, AJ Holding Limited, also exists for managing investments in subsidiaries and associated companies and this bodes well for stability. EY Ford Rhodes Chartered Accountants, is the external auditor of the Company. The auditor has expressed an unqualified opinion on the financial statements ending June 30, 2022. The Company’s Board comprises seven directors, including the Chairman-Mr. Mian Muhammad Ahsan. The Board of the Company consists of one non-executive and four independent members. Mr. Hafiz Mustanser Ahmed is the CEO of the Company. He carries more than 2 decades of professional experience.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.