The Pakistan Credit Rating Agency Limited
01-Jan-70
Analyst
+92-42-35869504
www.pacra.com
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| Rating Type | Entity | |
|
Current (30-Apr-19 ) |
Previous (30-Oct-18 ) |
|
| Action | Upgrade | Maintain |
| Long Term | BBB- | BB+ |
| Short Term | A3 | A3 |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
Rustam Towel (Pvt.) Limited (Rustam Towel), a family run business concern, is an export oriented towel manufacturer. Currency devaluation has boded well for export oriented textile companies. The towel and denim industry continues to surge forward on the back of Pakistan's cotton, which is more suitable for coarse count yarn. Towel industry enjoys good margins, which is also reflected in the Rustam Towel's profitability. On standalone basis, the Firm's revenue has increased by almost 11% on YoY basis and margins are in line with the industry. The Firm's concentration levels - both customer and geographical - are well managed with the Company having a policy of capping revenue from a single customer to 20%. The ratings reflect adequate financial risk profile of the Company. The working capital management has improved but needs further strengthening. The ratings further incorporate improved governance framework of the Company backed by appointment of SBP enlisted auditors.
The ratings are dependent on sustaining business margins and improving working capital management. Project completion and revenue generation of denim manufacturing facility are also critical to the ratings.
About
the Entity
Rustam Towel (Rustam Towel), incorporated in 1995, is engaged in manufacturing and marketing of different varieties of towel. It has installed vertically integrated manufacturing facilities at Lahore which include 7,680 spindles, 73 looms, dyeing and stitching facilities. Going forward, Rustam Towel also intends to expand its business by erecting a new denim manufacturing facility. Rustam Towel is a private company owned by Dogar Family, belonging to Gujranwala, based in Lahore. Mr. Sanaullah along with his son and three brothers own the Company.
Rustam Towel's board include five members; representing Dogar Family. Mr. Sanaullah Dogar, the Chairman, carries with him over three decades of experience in textile sector. He is supported by his brothers, while, Mr. Waseem Dogar – youngest brother being the director, largely manages overall day to day affairs of the Company.