Analyst
Fatima Khan
fatima.khan@pacra.com
+92-42-35869504
www.pacra.com
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Related Research
PACRA Maintains Entity Ratings of Al-Rahim Textile Industries Limited
Rating Type | Entity | |
Current (26-Dec-24 ) |
Previous (28-Dec-23 ) |
|
Action | Maintain | Maintain |
Long Term | A | A |
Short Term | A1 | A1 |
Outlook | Stable | Stable |
Rating Watch | - | - |
Al-Rahim Textile Industries Limited (‘Al-Rahim’ or ‘the Company’) is primarily engaged in the manufacturing of towels and fabrics. Established in 1991, Al-Rahim has positioned itself as a leading home textile manufacturer and exporter from Pakistan. The Company operates with a modern, state-of-the-art facility equipped with advanced plant and machinery, enabling the production of high-quality products, including towels, bedding, and kitchen linens. Situated on 38 acres of land in Nooriabad, the plant has a semi-vertically integrated setup that allows all production processes to occur within its premises, enhancing overall efficiency. Over the periods, Al-Rahim has undergone various phases of capacity expansions. These include advancements in air-jet terry weaving, yarn-dyed and jacquard towel manufacturing, terry and fabric dyeing, printing, and stitching. The Company has cultivated a strong customer base, which is regarded as one of its most valuable assets. Al-Rahim is committed to providing the highest quality products, aiming to achieve customer satisfaction through its principles of innovation, commitment, integrity, and efficiency. The Company holds a range of certifications for its products and facilities, validated through periodic audits by internationally recognized bodies. These certifications include Oeko Tex 100 Class-I and Class-II, BSCI, C-TPAT, Sedex, GOTS, SCAN, BCI, Egyptian Cotton Gold Certificate, GRA, RCS, Cradle to Cradle, Made in Green, EcoLabel, and BRC, which highlight its adherence to global standards and best practices. According to management, Al-Rahim commands approximately 9% of the market share in Pakistan’s textile sector. While the country’s total textile exports have experienced a volumetric increase of ~20%, the value of exports has remained stagnant, recording $16.7bln in FY24 compared to $16.5bln in FY23, reflecting a decline in unit prices. Towel exports contribute ~6% (value-wise) to total textile exports, amounting to around $1bln in FY24, similar to the previous year. Notably, the volume of towel exports increased by 14% during this period. As per the management accounts (FY24), the Company’s revenue reached PKR 29,924mln, comprising PKR 24,541mln from export sales and PKR 6,363mln from local sales. This represents an overall year-on-year growth of 15.4%. Local sales exhibited significant growth, while export sales saw a modest increase of 6%. Although rising raw material and utility costs slightly impacted gross and operating margins, the Company maintained a stable net margin of approximately 7.5% during the review period. Al-Rahim’s sponsors have a deep understanding of the business and are actively involved in strategic decision-making. The Company’s business strategy is centered on maintaining a diversified customer portfolio with reduced concentration risks and producing a wide range of terry towel products to meet international market demands. The Company’s financial risk profile reflects robust coverage ratios, healthy cash flows, and an efficient working capital cycle. The capital structure is leveraged, with short-term borrowings primarily utilized for working capital management.
The ratings are dependent upon improvement in market share, optimal operations, sustaining growth in top-line, and retaining sufficient margins while maintaining financial risk at a low level is important. Meanwhile, strengthening the governance framework for better oversight of strategic affairs is considered essential.
About
the Entity
Al Rahim Textile Industries Limited, originally established as a sole proprietorship in 1991. The board, led by the Saya family, includes three members. Mr. Faisal Rahim Saya, son of Mr. Abdul Rahim, serves as the CEO, overseeing the company's operations.