PACRA Maintains Entity Ratings of Al Rahim Textile Industries
Al Rahim Textile Industries (Al Rahim) is a family owned textile entity that boosts a strong position in towel manufacturing followed by gradual entry in processed fabric. Al Rahim has managed to increase its business profile following expansion at its state of the art production site in Nooriabad, Sindh. Al Rahim’s primary business remains towel oriented exports and it is now a leading towel exporter of Pakistan. However, it provides fabric and other processing facilities to its associated company – Al Rahim Retail and to other local manufacturers. Textile industry overall is witnessing suppressed margins due to increased cotton prices and higher cost of doing business in Pakistan. However, towel and denim industry continues to surge forward on the back of Pakistan’s cotton which is more suitable for coarse counts linked products. Towel industry continues to give good margins which is reflected in Al Rahim’s profitability. However, on standalone basis, significant increase in inventory levels following increased production requires prudent working capital management. Expansion and increased inventory levels caused build up of financial risk. Nevertheless, it still carries adequate leveraging with good coverages. Going forward, in absence of any further debt-driven expansion and with better working capital management, financial risk profile is expected to become stronger.
The ratings are dependent on sustaining business margins while maintaining financial risk at manageable level. Prudent management of cash flows to meet financial obligations will remain critical. Strengthening of corporate and governance framework and timely completion of related exercise in a timely manner is critical to hold ratings.
Al Rahim Textile Industries (Al Rahim), incorporated as a sole proprietorship concern, is engaged in manufacturing and marketing of different varieties of towels and fabric. Al Rahim provides processing services to other traders. It has installed state of art manufacturing facilities at Nooriabad which include 120 air jet looms, 164 terry towel looms, 56 Sulzer Looms and dyeing facilities.
Al Rahim group is in the process of formulating a strong corporate structure. This includes formation of holding company - to bring its business in Pakistan and abroad under one umbrella - and conversion of Al Rahim (Currently under sole propreitor structure) into a limited liability company. Alongside, a leading firm of accountants is being appointed to review and strengthen accounting and related practices.
Mr. Abdul Rahim Saya – Chairman Al Rahim, started the business in 1991. Mr. Abdul Rahim has two sons Mr. Shahzad Rahim Saya and Mr. Faisal Rahim Saya, who mainly manage the family business. Mr. Faisal is designated as Deputy Chairman and manages overall business affairs of Al Rahim. Mr. Shahzad mainly manages production processes of Al Rahim. He is assissted by an professional management team.