The Pakistan Credit Rating Agency Limited
25-Aug-21
Analyst
Sehar Fatima
sehar.fatima@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
- Methodology | Corporate Rating | Jun-21
- Criteria | Correlation Between Long-term & Short-term Rating Scales | Jun-21
- Criteria | Rating Modifiers | Jun-21
Related Research
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PACRA Assigns Positive Outlook to Entity Ratings of Ahmed Fine Textile Mills Limited
| Rating Type | Entity | |
|
Current (25-Aug-21 ) |
Previous (28-Aug-20 ) |
|
| Action | Maintain | Maintain |
| Long Term | A- | A- |
| Short Term | A2 | A2 |
| Outlook | Positive | Stable |
| Rating Watch | - | - |
The ratings reflect Ahmed Fine Textile Mills Limited's (Ahmed Fine) association with renowned business groups of Pakistan. The Company is primarily engaged in the spinning business and also has presence in weaving segment through a wholly owned subsidiary – Fazal Rehman Fabrics Limited. Positive Outlook on the entity ratings incorporates the Company's improving business profile plus its strong financial risk matrix reflected by reasonable working capital cycle; healthy coverages; and moderately leveraged capital structure. During 9MFY21, the Company's revenue witnessed double digit growth to stand at PKR 4.5bln. During the period, improved margins and reduced finance cost have strengthened the net-income to stand at PKR 300mln. Additionally, Ahmed Fine is planning on enhancing its capacity by 49,248 spindles, thereby improving its business profile to boost revenues. 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 continuous strengthening of business operations under the current economic conditions; and a strong financial profile with healthy coverages and moderate leveraging. The Company’s ability to generate ensuing cash flows to fulfill its financial obligations will remain critical for the ratings.
About
the Entity
Ahmed Fine Textile Mills Limited (Ahmed Fine), incorporated in 1989, is engaged in manufacturing and marketing of different varieties of yarn. The company operates one spinning unit having 46,128 spindles, manufacturing coarser-count yarn. Power requirement stands at 6MW; met through captive sources.
The board of directors contain seven members in total. Mr. Rehman Naseem, the CEO, carries with him over two decades of experience in textile sector. He is supported by a team of seasoned professionals, supplementing his capabilities.