The Pakistan Credit Rating Agency Limited
19-Mar-19
Analyst
Ateeb Riaz
ateeb.riaz@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
- Methodology | Corporate Ratings | Jun-18
- Methodology | Criteria | Rating Modifier | Jun-18
- Methodology | Correlation Between Long-Term And Short-Term Rating Scale | Jun-18
Related Research
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PACRA Maintains Entity Ratings of Maksons Textile (Pvt.) Limited
| Rating Type | Entity | |
|
Current (19-Mar-19 ) |
Previous (19-Sep-18 ) |
|
| Action | Maintain | Maintain |
| Long Term | BBB- | BBB- |
| Short Term | A3 | A3 |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
The ratings reflect adequate business profile of Maksons Textile (Private) Limited (the Company), depicted by its strong gross margins and adequate but stable net margins. The ratings incorporate adequate governance framework and experienced management team along with effective control environment. The country’s textile exports improved by ~9% in FY18 on the back of bailout package from the government and recent devaluation of rupee. This benefited the Company’s top line of which exports constitute 95%. The Company caters to niche market in textile industry providing textile solutions in the form of semi-finished and finished fabrics; reflecting well in gross margins. The Company's bottom line, though relatively small in size, has remained steady over the years. With planned BMR activities in the short-term, the Company is expected to bring efficiencies and growth, going forward. The company has a relatively stretched financial risk profile, characterized by high leveraging and adequate debt servicing ratio. The ratings account for financial strength of the Company's sponsors - AL-Tariq Group - having strong presence in engineering and trading segments.
The ratings are dependent on rationalization of top ten client concentration, with anticipated growth in top line. Risk absorption capacity is expected to improve with scheduled repayments easing out leveraged capital structure. Maintaining adequate debt services coverage remains critical.
About
the Entity
Maksons Textile Private Limited (Maksons) incorporated in 2000, is a weaving unit specializing in greige fabrics, processed fabrics and made-ups including home textile. Maksons has a state of the art weaving unit with an installed capacity of 114 weaving looms including Airjet & Sulzer looms. Shareholding is held equally by four individuals. The company belongs to Al-Tariq Group, specializing in engineering, having companies involved in construction, trading, textile and power generation.
Maksons Textile’s Board comprises four members, all are sponsors. The position of the Chairman is held by Mr. Abdul Quddoos whereas Mr. Khalid Majeed is the CEO of the company. The day to day operations are run by Director - Mr. Muhammad Khalid - whereas the CEO assumes more of monitoring role and also looks after the financial and banking issues.