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The Pakistan Credit Rating Agency Limited
Press Release

Date
30-Apr-19

Analyst
Muhammad Hassan
muhammad.hassan@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 Allawasaya Textile and Finishing Mills Limited

Rating Type Entity
Current
(30-Apr-19)
Previous
(28-Dec-18)
Action Maintain Initial
Long Term BBB- BBB-
Short Term A3 A3
Outlook Stable Stable
Rating Watch - -

The ratings reflect the adequate business profile of Allawasaya Textile and Finishing Mills Limited (the Company) and its association with three industrial families of Multan and demonstrated support of sponsors. Besides the company, sponsors have presence in the oilseed extraction industry and textile value-chain. The Company is involved in the manufacturing and sale of cotton yarn and man-made fibers. The Company has a small size, low margins and limited profitability. Recent devaluation of Pakistani currency had little impact on the Company’s revenue, since all its sales are made in the local market, which combined with the underutilization of production capacity led to the Company making loss in 1HFY19. Meanwhile, completion of the Company’s BMR is expected to bring in efficiency gains and improved margins. The financial profile of the Company is characterized by moderate leveraging and low coverages. Major share of the debt is short-term; however, long-term debt’s share is rising since the inception of BMR.
The ratings are dependent upon the sponsor support and management's ability to improve margins, profitability and financial profile of the Company. This includes keeping the debt levels manageable and improve the Company's competitive position in the industry.

About the Entity
Allawasaya Textile and Finishing Mills Limited’s (the Company), is a listed company engaged in manufacturing and sales of different varieties of yarn. The Company currently operates 30,591 spindles in Multan. The company fulfills its energy needs in-house and has a production capacity of 4.2MW. The Company is primarily owned by Mian Tauqir Family (37.6%), Jamil Family (35.4%) and Maqbool Family (25%), while rest is owned by the friends of the families.

Overall control vests in an eleven-member board of directors, which includes four non-executive directors and three independent directors. Three members represent Tauqir family, two members including the Chairman, Mian Muhammad Jamil, represent Jamil family while two members including the CEO, Mian Tanvir Ahmed, represent Maqbool Family. The CEO carries the extensive experience of the textile industry and is supported by an experienced 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.