PACRA Maintains Entity Ratings of Saif Textile Mills Limited : AsiaNet-Pakistan

PACRA Maintains Entity Ratings of Saif Textile Mills Limited

December 27, 2019 | General Business News | Share:

Lahore, December 27, 2019 (PPI-OT): Saif textile mills limited (Saif Textile), a prominent textile venture of Saif Group, is involved in manufacturing and marketing of various varieties of cotton yarn including, melange yarn, dyed yarn, man-made yarn and raw white yarn. Despite challenging environment, Saif Textile has managed to maintain its optimal capacity utilization while upgrading its machinery in order to ensure operational efficiencies and eventually higher production volumes. The top line of the Company has shown a healthy growth that translated in to better margins in FY19.

Moreover, the dollar-based subordinated loan was waived off in FY19, helping the Company to post a one-time gain. Higher interest rates and increased short term borrowing squeezed the net margin in 1QFY20 resulting in a net loss. The financial profile of the Company remains constrained by debt driven BMR thus resulting in highly leveraged capital structure with stretched coverages.

Going forward, with better efficiency and specialized product profile, the management expects Saif Textile’s margins to improve and become comparable with peers. The assigned ratings incorporates experienced management team, strong financial muscle of the Sponsors and their willingness to support the entity as demonstrated historically.

The ratings are dependent on managing financial obligations effectively while improving business margins. Any further accumulation of debt and/or shift from current business strategy, impacting the risk profile of the entity, may negatively affect the ratings. Going forward, Saif group’s support to the entity and prudent debt management would remain critical.

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