PACRA Maintains Entity Ratings of Allawasaya Spinning Mills Limited
The ratings reflect the adequate business profile of Allawasaya Spinning Mills Limited and its association with an established business family in spinning sector of the textile industry. The Company is engaged in the manufacturing and sale of cotton yarn. Recent devaluation of Pakistani currency had little impact on the Company’s revenue, since all its sales are made in the local market. The Company has a small size, low margins and limited profitability.The Company’s margins were lower than other similar companies in the spinning sector, mainly due to higher finance cost. In the long term, the planned BMR is expected to bring in efficiency gains and improved margins. The financial profile of the Company is characterized by moderate leveraging and moderate coverages. Long- term debt occupies the major portion of total debt, while short term borrowings vary with seasons, increasing during the cotton procurement season.
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.
Allawasaya Spinning Mills Limited started operations in 2004 as a spinning Mill, with an installed capacity of 17,500 spindles. The Company’s head office and production facility are located in Multan. The Company is owned by ‘’Jamil Family’’ which also owns a major share in Allawasaya Textile and Finishing Mills Limited. Mian Jamil controls (39%) and his son Mian Alamjir Jamil contols (61%) of the shareholding in the Company.
The Company has a two-member board, which is entirely comprised of the sponsor family members. Mian Muhammad Jamil is the Chairman of the board and Mian Alamgir is the other executive director and the CEO of the Company. Both the chairman and the CEO have vast industry experience and hold directorships in other textile businesses.