The Pakistan Credit Rating Agency Limited
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Sehar Fatima

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PACRA Assigns Initial Entity Ratings to Din Textile Mills Limited

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

Din Textile, a public listed company is a group concern of Din group – one of the leading business groups established in 1954 having presence across various sectors including textile, dairy, poultry and real estate. Over the years, since its commencement, the Company has expanded into four units with installed capacity of 123,072 spindles and recently added 144 looms. The spindles and looms are of advanced technology, hence are operationally efficient. The ratings incorporate the Company’s moderate yet improving business profile where the revenue is emanating from two segments - spinning and weaving. The Company's product portfolio comprises of combed compact yarn, core spun lycra yarn, slub lycra yarn, dyed yarn, melange yarn, ply yarn, gassed yarn, and bleached cotton web for surgical and cosmetic use. The management is planning to further diversify the revenue stream. During 3QFY21, the Company's revenue grew by 24% (3QFY21: PKR 12,395mln; 3QFY20: PKR 9,985mln) due to concerted management efforts towards increased profitability. The Company majorly draws its revenue from local sales with exports fluctuating around 25% of the total revenue. Margins and net income have improved on account of better prices accompanied by higher operational efficiency. During the period, cashflows have strengthened along with improved coverages. However, the Company has a high-leveraged capital structure. Textile exports of the country recorded a double-digit increase of ~23% for FY21 to stand at USD 15.4bln as compared to USD 12.5bln in FY20 due to an increase in demand for textile products internationally, led by good recovery around the globe post-pandemic. Going forward, the textile sector’s outlook is expected to stay stable in the medium term where the demand for textile products is expected to increase. The probability of little attrition in demand remains on the horizon attributable to the outbreak of COVID-19 variants.
The ratings are dependent on improving business profile under the current economic conditions; and a strong financial profile with healthy coverages. Improving capital structure while growing business profile remains critical for the Company.

About the Entity
Din Textile Mills Limited (Din Textile or DTML) is a public limited company, incorporated in 1988. Din Textile Mills Ltd is engaged in the manufacturing and sale of yarn. Its product portfolio comprises of combed compact yarn, core spun lycra yarn, slub lycra yarn, dyed yarn, melange yarn, ply yarn, gassed yarn, and bleached cotton web for surgical and cosmetic use.
The overall control of the Company vests in a nine members’ board with Shaikh Muhammad Muneer as Chairman. Three are non-executive directors, three are executive directors while three members are independent directors. Shaikh Muhammad Tanveer manages day to day operations as CEO of the Company. He is supported by a team of experienced professionals.

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.