PACRA Maintains Entity Ratings of Allawasaya Textile and Finishing Mills Limited

Lahore, October 30, 2019 (PPI-OT): The ratings reflect Allawasaya Textile and Finishing Mills Limited’s (the Company) association with three industrial families of Multan and demonstrated support of sponsors. Sponsors have presence in the oilseed extraction industry and other segments of textile value-chain. The Company is involved in the manufacturing and sale of cotton yarn and man-made fibers. The Company enhanced its capacity during the year, though it still remains relatively small. Recent devaluation of Pakistani currency had no tangible impact on the Company’s revenue, since all its sales are made in the local market.

The margins of the Company were squeezed during first 3QFY19, which led to losses as business performance remained under pressure. However, with the completion of the Company’s BMR in the last quarter of FY19, the Company’s performance started to improve. The financial profile of the Company is characterized by moderate leveraging and low coverages. The Company took additional debt to finance BMR. Material improvement in cash flows, in line with upcoming debt obligations, remain imperative.

The ratings are dependent upon the sponsor support and management’s ability to improve margins, profitability and the Company’s competitive position in the industry. This includes keeping the debt levels manageable. Any further deterioration in margins or coverages will have a negative impact on the ratings.

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