Lahore, August 29, 2018 (PPI-OT): The ratings reflect Ahmed Fine Textile Mills (Ahmed Fine) association with renowned business groups of Pakistan – jointly owned by Fazal Group and Hussain Group. The company, is engaged primarily in spinning business and also has presence in weaving segment through a wholly owned subsidiary – Fazal Rehman Fabrics Limited. The ratings incorporate improved business performance of the company – topline increased by ~23% – a factor of better pricing and increase in exports sale as proportion of total sales. Recent devaluation of currency and exports rebate packages announced by the government also supplemented growth in revenue.
The company’s margins improved, a factor of operational efficiencies. However, re-imposition of custom duty and sale tax on cotton imports in FY19 budget, coupled with exclusion of tax rebate on yarn and greige fabric may put pressure on industry margins. Ahmed Fine’s financial profile is strong reflected by (i) relatively efficient working capital cycle, (ii) strong coverages, and (iii) moderately leveraged capital structure. Going forward, the company intends to enhance its capacity if market conditions remain favourable. The expansion will be primarily financed through debt. The ratings also incorporate the experienced management team.
The ratings are dependent on sustaining business margins while maintaining a sound financial profile with strong coverages and manageable leveraging. The company’s ability to generate ensuing cash flows to fulfill its financial obligations, in case of debt driven expansion, remains critical for the ratings.
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
Category: General Business News