PACRA Maintains Entity Ratings of Reliance Weaving Mills Limited : AsiaNet-Pakistan

PACRA Maintains Entity Ratings of Reliance Weaving Mills Limited

April 25, 2018 | General Business News | Share:

Lahore, April 25, 2018 (PPI-OT): The ratings reflect sound business profile of RWML. The company is focused on expanding into local markets, while maintaining exports. Over the years, the company has sustained overall margins, wherein, the energy cost remains a key challenge. With recent BMR activities in the weaving segment further efficiencies are expected to flow in. Furthermore, the company plans to enhance the capacity of its weaving segment. FG has parked strategic investment book on RWML’s books, some of it provides a stable stream of dividend income, while rest are in development stage; requiring cash.

The ratings are constrained by stretched financial risk profile. This is reflected in mismatch in short-term debt vis-à-vis self-liquidating current assets. Limited cashflows – a factor of lower profitability – constrained the coverages. Cognizant of these issues, the management is in process of re-profiling its balance sheet – converting short-term debt into long-term at lower rates, financial risk profile lately. RWML’s association with Fatima Group, a growing conglomerate, is a key rating factor.

The ratings are dependent on the management’s ability to prudently mange the liquidity and debt profile of the company, particularly working capital, while sustaining business margins and the management’s ability to uphold the entity’s risk profile.

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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Category: General Business News