Lahore, November 18, 2021 (PPI-OT):The ratings of Ahmed Fine Weaving Limited (Ahmed Fine Weaving) reflect its improving business profile emanating from rising revenues and profitability. The Company is a family-owned public unlisted company with weaving capacity of 270 Air Jet looms where BMR has been recently completed. The ownership rests with the family of Mr. Ashar Fazal including his mother and children. The current governance framework can be further strengthened. The Company’s management is cognizant of the textile industry’s volatility and has planned up gradation of machinery to remain competitive.
The ratings reflect sustained business profile over the years where recently improvement has been recorded in revenues. The Company’s topline increased by 15% YoY, during FY21, to stand at PKR 6.6bln; a resultant of higher capacity utilization accompanied with better prices. Sales mix represents contribution from both local and export market; FY21 majorly tilted towards exports 67% of total revenue (FY20: 57%). This trend has been generally witnessed in the textile industry during last year post-pandemic tenure. During the period, margins have improved along with a sizable increase in net profitability. Ratings also incorporate sound financial risk manifested by significant improvement in working capital and coverage. Going forward, the planned CAPEX is expected to bring in efficiency gains and improved margins.
Textile exports of the country recorded a double-digit increase of ~23% for FY21 to stand at USD 15.4bln as compared to USD 12.5bln in FY20. The same trend continued and exports recorded 27% growth to stand at USD 4.4bln in first-quarter ending September 2021. The growth is attributable to an increase in demand for textile products internationally, led by good recovery around the globe post-pandemic.
Going forward, the textile sector’s outlook is expected to stay stable in the medium term where the demand for textile products is expected to increase. 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)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com