The Pakistan Credit Rating Agency Limited
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Muhammad Hassan

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PACRA Maintains Entity Ratings of Al Rahim Textile Industries

Rating Type Entity
Action Maintain Maintain
Long Term A- A-
Short Term A2 A2
Outlook Stable Stable
Rating Watch - -

Al Rahim Textile Industries (Al Rahim) is a family owned textile entity that enjoys a strong position in towel manufacturing followed by gradual entry in processed fabric. Al Rahim’s primary business remains towel oriented exports and it is now a leading towel exporter of Pakistan. Al Rahim has managed to strengthen its business profile following expansion at its state of the art production site in Nooriabad, Sindh. It also provides fabric and other processing facilities to its associated company – Al Rahim Retail - and to other local manufacturers. Towel and denim industry continues to surge forward on the back of Pakistan’s cotton which is more suitable for coarse counts linked products. However, overall export volumes of the industry have stagnated. Towel industry enjoys relatively better margins that are reflected in Al Rahim’s profitability. The financial profile of the Company is categorized by strong coverages and moderate leveraging. 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 further improve.

The ratings are dependent on sustaining business margins while maintaining strong financial risk profile at manageable level. Prudent management of working capital requirements will remain critical. Strengthening of corporate structure, governance framework and timely completion of related exercise is critical. Any significant delays in this will impact the ratings negatively.

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. Al Rahim has formulated a detailed framkework for this purpose including a leading firm of accountants to review and strengthen accounting and related practices.

About the Entity
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.

Mr. Abdul Rahim Saya – Chairman Al Rahim, started the business in 1991. Mr. Abdul Rahim has two sons Mr. Shehzad 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. Shehzad mainly manages production processes of Al Rahim. He is assissted by an professional management team.

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.