PACRA Maintains Ratings for Glamour Textile Mills Limited Amid Industry Challenges.

Lahore: The Pakistan Credit Rating Agency Limited has announced that it is maintaining the entity ratings for Glamour Textile Mills Limited, reflecting the company’s sustained performance despite significant industry challenges. The ratings for Glamour, which are BBB- for the long term and A2 for the short term, come with a stable outlook. This decision comes as Pakistan’s yarn production saw a decline of approximately 8.1% during FY24, amounting to around 2.5 million metric tons, while export volumes increased by 25.6% to nearly USD 956 million (PKR 272 billion), driven by currency depreciation.

According to The Pakistan Credit Rating Agency Limited, the economic recession and floods have adversely impacted cotton crop yields, thereby depleting raw materials and driving up yarn prices. Despite these challenges, the ratings consider the expertise of Glamour’s sponsors in the leather garments and spinning segments. The company operates mainly in the local market, holding a significant share with 42,384 spindles within an industry capacity of approximately 13.4 million spindles. Glamour’s revenue is derived from trading imported fiber and manufacturing carded yarn from cotton and viscose blends. While overall revenue grew by 55% due to trading income, elevated raw material costs, interest rates, and taxes have squeezed margins.

The financial stability of Glamour Textile Mills is supported by retained earnings, with borrowings aligned to meet working capital needs from JS Bank and Soneri Bank. However, the company’s cash flows are under stress, affecting its financial coverages. The company is urged to develop strategies to manage energy-related costs and improve governance and internal control frameworks to enhance performance. The sustainability of Glamour’s operations relies on maintaining cashflows and coverages at adequate levels, alongside the impact of increased energy tariffs on profitability.

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