The Pakistan Credit Rating Agency Limited
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Muhammad Hassan

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PACRA Maintains Entity Ratings of Al Rahim Textile Industries Limited

Rating Type Entity
Action Maintain Maintain
Long Term A- A-
Short Term A2 A2
Outlook Stable Stable
Rating Watch - -

Al Rahim Textile Industries Limited (Al Rahim) is a family owned textile company that enjoys a strong position in towel manufacturing followed by gradual entry in processed fabric. Al Rahim’s primary business remains towel oriented exports and it is now one of the leading towel exporters of Pakistan. Al Rahim has managed to strengthen its business profile following expansion at its production site in Nooriabad, Sindh. It also provides fabric and other processing facilities to its associated company – Al Rahim Retail - and to other local manufacturers. Towel and denim industry continues to surge forward on the back of local cotton which is more suitable for coarse counts linked products. However, overall export volumes of the towel industry have stagnated. Towel industry enjoys relatively better margins that are reflected in Al Rahim’s profitability. The financial profile of the Company is categorized by strong coverages and moderate leveraging. However, working capital management still needs improvement. Going forward, governance framework of the Company is expected to further strengthen. In absence of any further debt-driven expansion and with better working capital management, financial risk profile is expected to further improve.
The ratings are dependent on sustaining business margins while maintaining strong financial risk profile at manageable level. Prudent management of working capital requirements will remain critical. Strengthening of corporate structure, governance framework and timely completion of related exercise is critical.

Al Rahim group is in the process of formulating a strong corporate structure. This also includes formation of a holding company - to bring its business in Pakistan and abroad under one umbrella. Al Rahim has formulated a detailed framkework for this purpose including a leading firm of accountants to review and strengthen accounting and related practices.

About the Entity
Al Rahim Textile Industries Limited (Al Rahim) was incorporated as a sole proprietorship but by the end of FY19 was converted in to a public unlisted company, by the name of Al Rahim Textile Industries Limited. All the assets and liabilities of the sole proprietorship are now purchased by Al Rahim Textile Industries Limited. There are three shareholders of the Company and majority of the shareholding lies with Faisal Rahim Saya (~90%). The Company is engaged in manufacturing and marketing of different varieties of towels and fabric. Al Rahim provides processing services to other traders. It has installed state of art manufacturing facilities at Nooriabad, Sindh.

Mr. Abdul Rahim Saya – Chairman Al Rahim - started the business in 1991. Mr. Abdul Rahim Saya's son, Mr. Faisal Rahim Saya, manages the family business. He manages overall business affairs of Al Rahim. He has extensive experience in textile sector and has been associated with the family business for more than two decades.

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.