PACRA Maintains Entity Ratings of Al-Rahim Textile Industries Limited

The ratings of Al-Rahim Textile Industries Limited (hereinafter referred to as “Al-Rahim” or “the Company”) reflect its robust business profile in the manufacturing of towels and fabrics. Operating for over three decades, Al-Rahim has developed into a home textile manufacturer and exporter based in Pakistan. The Company operates a state-of-the-art facility equipped with modern plant and machinery, supporting the production of towels, bedding, and kitchen linens. The Company’s plant operates with a semi-vertically integrated setup, enabling production processes to be carried out within its premises and supporting operational efficiency. The facility encompasses air jet terry weaving, yarn dyed and jacquard towel manufacturing, terry and fabric dyeing, printing, and stitching. Al Rahim has built a customer base regarded as its key asset. The Company’s products and facilities are certified 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. During 2HFY25, the global trade environment remained challenging following the imposition of reciprocal tariffs, which increased the landed cost of Pakistani towel exports in the US market and weakened price competitiveness. This led to a reduction of order volumes by US buyers, resulting in continued pressure on exports to the US region. During FY25, Pakistan’s towel exports remained broadly stable in value terms at USD 1,082.6 million compared to USD 1,055.1 million in FY24, while export volumes increased marginally by ~1.4 percent to 226,300 metric tons. In line with industry and geographic trends, the Company’s export concentration towards the USA declined materially, with the revenue impact partially offset by the strategy to increase penetration and export volumes to European markets. As per management accounts for FY25, the Company’s topline declined by ~7.1% to PKR 27,877mln from PKR 30,003mln in FY24. While growth in local sales & services provided some crucial support, margins remained under pressure due to elevated raw material prices, wage inflation, and higher selling and marketing expenses. To combat cost rationalization, the management has initiated various efficiency measures, notably investments in wind and solar energy, to contain energy costs over the longer run. The sponsors have a sound understanding of the business and remain engaged in strategic decision-making. The Company’s strategy is focused on maintaining a diversified customer portfolio to limit concentration risk, while producing a range of terry towel products for international markets. The financial risk profile of the company is demonstrated by adequate coverages, cashflows, and a stretched working capital cycle. The capital structure is moderately leveraged and primarily comprised of short-term loans for working capital management. Going forward, Al Rahim plans to establish an additional modern & advanced facility for printed fabrics to cater to the requirements of its existing export clientele while further strengthening its local product and sales portfolio. Management maintains a conservative approach towards leverage, with planned capital expenditures and expansion initiatives expected to be largely funded through internal cash generation and sponsor support.
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.