Lahore, January 23, 2023 (PPI-OT):The ratings of Ali Embroidery Mills (Private) Limited (Ali Embroidery) reflect its sustained business profile. The Company is a family-owned private limited company which operates with 30 Schiffli and 108 Multi- Heads embroidery machines. The embroidery industry consists of several players operating on small scale with informal structures. However, Ali Embroidery has tiered organizational structure with good operating capacity. The ratings reflect sustained business profile over the years where recently an improvement has been recorded in revenues. During FY22, the company’s topline reflected growth to PKR 1.2bln (FY21: PKR 959mln).
The company has witnessed an increasing trend of customer sales, majority of the revenues are generated from related parties, while the rest of the customer base has also contributed over the years. During the period, operating profit and PBIT margins have improved. Ratings also incorporate adequate financial risk manifested by suitable working capital and coverage. During FY22, Pakistan’s textile exports surged to $19.3bln (recording a growth of 26%).
Exports grew owing to increased volumetric growth of (16% YoY) in the value-added segment, a steep rise in global demand, and record-high cotton prices. Under the value-added category, the knitwear segment remained the top performer by posting 34% YoY growth in exports to $5.1 billion in FY22 due to a sharp rise in global demand, especially in the US and European countries. Other value-added segments such as ready-made garments, bed wear, and towel posted YoY growth of 29%, 19%, and 19% to $3.9 billion, $3.3 billion, and $1.1 billion respectively. However, a slowdown is expected in textile demand amid burgeoning inflationary pressures in the exporting destinations, especially in the US and European countries.
The ratings are dependent on the management’s ability to uphold the entity’s performance trend. Meanwhile, maintaining strong margins and coverages to fulfill financial obligations will remain critical. Improvement in the governance framework is considered important.
For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
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Lahore, Pakistan
Tel: +92-42-5869504-6
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Email: hammad.rashid@pacra.com
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