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The Pakistan Credit Rating Agency Limited
Press Release

Date
25-Apr-18

Analyst
Aman Zafar
aman.zafar@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Entity Ratings of Nishat Mills Limited

Rating Type Entity
Current
(25-Apr-18)
Previous
(30-Jun-17)
Action Maintain Maintain
Long Term AA AA
Short Term A1+ A1+
Outlook Stable Stable
Rating Watch - -

The ratings reflect diversity of Nishat Mills underlying businesses, along with a conservative capital structure. This emanates from its implicit holdco structure within Nishat Group (NG), providing resilience to adversities in underlying sectors, particularly textile, while upholding the overall profile of Nishat Mills. Significant as well as diverse strategic investment portfolio of the company generates a regular and growing dividend stream in addition to a potential of capital appreciation. Nishat Mills is one of the market leaders in textile industry, maintaining a sizeable, export-oriented composite unit in the country's textile sector. Superior profile is characterized by requisite diversification, in terms of both geography and customer base. Despite key challenges being faced by the textile industry, it has maintained its performance indicators. The management is focusing on capitalizing enhanced facilities in order to achieve overall cost efficiencies.
The ratings are dependent on the company's ability to sustained business margins and, hence, support profitability. Low leveraged capital structure provides room for expansion; should be managed prudently. Moreover, induction of independent members on board for better governance is considered important.

About the Entity
Nishat Mills, established in 1951, is the largest textile composite unit and a leading exporter of textile products in the country. The company is majority (~53%) owned by Mansha family members and group companies. Nishat Mills also acts as key participant in multiple strategic investments of Nishat Group (NG). NG - a leading conglomerate - maintains substantial presence in the country's financial sector, and strong foothold in textile, cement, power sectors, and hospitality sector. Also, the group has entered in Pakistan's automobile assembly industry.

NML has a seven-member board of directors; two, including the CEO, represent sponsoring family, four are working for NG companies (including one Nishat Mill's executive), and one is an independent member. The CEO, Mr. Umer Mansha, has been associated with Nishat Mills since 1994 and carries extensive experience in textile industry. He is supported by an experienced management team. Moreover, the quality of systems and processes in place is considered good.

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.