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The Pakistan Credit Rating Agency Limited
Press Release

Date
04-Mar-22

Analyst
Iram Shahzadi
iram.shahzadi@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Assigns Initial Entity Ratings to US Apparel & Textiles (Pvt.) Limited

Rating Type Entity
Current
(04-Mar-22 )
Action Initial
Long Term A+
Short Term A1
Outlook Stable
Rating Watch -

US Apparel & Textiles (Private) Limited (US Apparel) is a prominent textile venture of US Group. The group companies operate under the umbrella of AJ holdings – flagship HoldCo of the group. The groups leveraging is nill, which is much of a conscious group decision. Sponsors exercise oversight of the businesses and professional management, well-equipped and well-experienced, spearhead the individual companies. Strategic direction is meticulously worked out and rigorously followed once decided and finalized. The Company is principally engaged in the manufacturing and export of ready-made garments. The Company’s management has experienced professionals, aided by comprehensive reporting, where operations of the Company are supervised with complete autonomy. Its established business profile emanating from strong presence in the broader value-chain; enabling the company to manage volatility in the textile industry. The rating reflects a steady revenue base in recent years. The topline primarily consists of exports. The company’s top line clocked in at PKR 30.7bln in FY21 (FY20: PKR 29.7bln) Up by 3.5%.Margins remained largely sustained where growth recorded in revenue. US Apparel continues to maintain Favorable capital structure and strong coverages signifying robust financial profile. Going forward, the Company is planning capacity enhancement projects of 20,000 Pcs per day. The Company also planning addition of 3MW in existing solar capacity of 4 M W. This will cater to expansion in revenue base and strengthening business profile of the company.
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. The same trend continued and exports recorded 27% growth to stand at USD 4.4bln in first-quarter ending September 2021. The growth is attributable 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 ratings are dependent on the Company’s ability to maintain a strong business profile amidst current circumstances. Preserving low leveraged capital structure and sound coverages remain imperative.

About the Entity
US Apparel & Textiles (Private) Limited (US Apparel) was incorporated on February 18, 1987 as a private limited company. US Apparel & Textiles (Private) Limited is principally engaged in the manufacturing and export of ready-made garments. The Company has five production units. The Company belongs to a prominent business venture of US Group. US Apparel is holds 100% shareholding of AJ Holding (Private) Limited. A Group holding company, AJ Holding Limited, also exists for managing investments in subsidiary and associated companies and this bodes well for stability. EY Ford Rhodes Chartered Accountants, is the external auditor of the Company. The auditor has expressed an unqualified opinion on the financial statements ending Jun 30, 2021.
The Company has a ten-member board with the presence of sponsors and their families. Mr. Asif Malik is CEO - designate. He carries twenty-five years of professional experience and holds Master's in Mechanical Engineering. He is assisted by a professional and long associated management team.

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.