PACRA Maintains Entity Ratings of Shahzad Textile Mills Limited
The ratings reflect modest business profile of Shahzad Textile Mills Limited accentuated by relatively lower margins when compared to its peers. The sponsors of the company have followed a conservative approach. The Company has largely maintained its revenues over the years. The rupee devaluation and GoP initiative of subsidized gas prices has provided a requisite breather to the export oriented industry. However, on standalone basis, the Company's revenues mainly tilt towards local sales. The Company's financial profile is considered strong mainly on the back of low leveraged capital structure, efficient working capital and liquidity position.
Going forward, Shahzad Textile Mills intends to expand its business by vertical integration into socks business by setting up a socks manufacturing plant. The ratings are dependent on improving business margins, especially post expansion into socks manufacturing. Meanwhile, prudent management of financial profile and maintaining financial discipline will remain critical.
Shahzad Textile Mills commenced its operations in 1981 as a public limited company. Mr. Imran Aslam (CEO) along with other family members collectively own majority (~73%) shares of the Company. The remaining shareholding of the Company is held by Corporates (~6%) and institutions (~21%). Shahzad Textile is in the business of manufacturing of ring spun cotton and synthetic blended yarns, with a total installed capacity of 79,800 spindles. Production is mainly sold locally directly to weavers, knitters and socks manufacturers as well as indirectly through traders and agents.
The board of the Company consists of only seven members, out of which two are executive, four non-executive and one independent director. CEO of the Company is Mr. Imran Aslam who is looking after the Company’s operations from more than two decades and he is supported by an experienced management team.