Lahore, September 04, 2020 (PPI-OT): The assigned ratings incorporate Gul Ahmed Textile Mills Limited’s (Gul Ahmed) sound operating track record with strong presence in the broader textile value-chain; enabling the Company to manage volatility in textile business. Assigned ratings also reflect presence of seasoned senior management team which possesses considerable experience in the textile sector. Presence in retail with renowned brand “Ideas” in local market adds up to stronger business risk profile.
The entity has achieved a sizable revenue base, while focus on value added products brings higher gross margins. This emanates from export market orientation, targeting established niche of quality-conscious institutional buyers. Nevertheless, this has led to customer concentration; longevity of relationship in addition to sustain quality would help manage the risk. During 3rd quarter of FY20, the revenues of all segments witnessed a decline due to the economic slowdown following lockdown to curb the spread of the Covid-19 pandemic.
Subdued domestic demand and declining export demand due to lockdowns in global markets on account of Covid-19 come as a double blow for textile companies. While export demand revived in last two months of FY20. However, domestic demand would fairly depend on recoup of the Country’s economy. Meanwhile, hefty branding activities and competition in the local market has kept net margins relatively strained. Liquidity profile of the Company is considered adequate with manageable working capital cycle and sufficient cash flows to meet outstanding obligations, while leveraging remains on the higher side.
The ratings are dependent on the Company’s ability to sustain its business profile while maintaining its margins and strong. At the same time, prudent management of working capital needs and meeting financial obligations remain critical.
For more information, contact:
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