PACRA Maintains Entity Ratings of Ahmed Fine Textile Mills Limited
The ratings reflect Ahmed Fine Textile Mills (Ahmed Fine) association with renowned business groups of Pakistan – jointly owned by Fazal Group and Hussain Group. The Company is primarily engaged in the spinning business and also has presence in weaving segment through a wholly owned subsidiary – Fazal Rehman Fabrics Limited. The ratings incorporate improved business performance of the Company on the back of prudent inventory procurement, resulting in notably higher margins in first two quarters, eventually resulting in better margins for FY19. Meanwhile, significant rupee devaluation and subsidized utilities for textile industry has made the local textile industry cost competitive. Ahmed Fine's financial profile is considered strong reflected by (i) efficient working capital cycle, (ii) strong coverages, and (iii) moderately leveraged capital structure. Additionally, the Company is in possess of enhancing its capacity, which will increase its leveraging. However, the loan will be availed on SBP's concessional rate. Going forward, high interest rate environment, coupled with withdrawal of zero rating status and restriction on sales to unorganized sector will have a restraining impact on local textile industry.
The ratings are dependent on sustaining business margins while maintaining a sound financial profile with strong coverages and manageable leveraging. The Company’s ability to generate ensuing cash flows to fulfill its financial obligations will remain critical for the ratings.
Ahmed Fine Textile Mills Limited (Ahmed Fine), incorporated in 1989, is engaged in manufacturing and marketing of different varieties of yarn. The company operates one spinning unit having 45,888 spindles, manufacturing coarser-count yarn. Power requirement stands at 6MW; met through captive sources. Initially, Fazal Group, Fatima Enterprise, and Hussain Group - had joint ownership of the company. Post-demerger, Fazal Group and Hussain Group has acquired 50% stake (each) in the company. Fazal Group has interests in Textile, Fertilizer, Energy, and Real Estate sectors while Hussain Group has key interest in Textile sector.
Overall control vests with seven members BoD. Four directors represent Fazal Group while three are representatives of Hussain Group. Management control vests with Fazal Group. Mr. Rehman Naseem, the CEO, carries with him over two decades of experience in textile sector. He is supported by a team of seasoned professionals, supplementing his capabilities.