PACRA Maintains Entity Ratings of Ahmed Fine Weaving Limited

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PACRA Maintains Entity Ratings of Ahmed Fine Weaving Limited

December 7, 2018

Lahore, December 07, 2018 (PPI-OT): The ratings reflect modest business profile of Ahmed Fine Weaving Limited – independently owned by a family stream belonging to erstwhile Fazal family of Multan. The sponsor’s long association with the textile business is considered positive. During recent years the company’s sales mix has shifted towards local sales. Meanwhile, the company’s declined margins has limited its profitability. Moreover, re-imposition of custom duties and sales tax on cotton and yarn imports, coupled with increasing interest rates has stretched the textile industry.

On standalone basis, the rupee devaluation has provided a requisite breather to the company to sustain its business margins, despite declining export sales. The management is cognizant of this and intends to strengthen its performance by expanding volumes. For the purpose the company is continuously in process of BMR activities.

The expansion projects have been financed through LTFF, with comfortable debt servicing cycle. Longer tenure and competitive rates of underlying debt should help aligning the impact of these financial obligation with ensuing cash flows. The company currently enjoys good financial risk profile, reflected by (i) relatively efficient working capital cycle, (ii) healthy coverages, and (iii) moderately leveraged capital structure.

The ratings are dependent on the company’s ability to improve its margins and maintain prudent working capital and financial profile. Any negative movement in margins, impacting profitability in turn, cash flows, will negatively impact the ratings. Improvement in governance framework is important.

For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com

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