Lahore, January 31, 2022 (PPI-OT):The assigned ratings of Latif Textile reflect adequate positioning of the Company in the relative universe. The Company is manufacturer and exporter of Yarn and Towels, having both Open End and Ring Spinning technologies for yarn and end to end weaving to stitching facilities for towel. The installed capacity is 20,160 spindles and 2,880 rotors along with 48 terry looms for towel weaving. Board comprises of two members where both are from sponsoring family. The Company’s management involves experienced professionals looking after operations of the Company. During FY21, the Company’s revenues stood at PKR 2.6bln (FY20: PKR 2.5bln).
Sales mix, dominated by local sales, display stagnancy over the years. The Company enjoys established customer base in local market which drives the major revenue. Operating profits and net profitability recorded sizable improvement in the recent year whilst margins remained good. Management of receivables is essential for the Company. The financial risk matrix displays moderate leveraging and improvement in coverage compared to last year. The company is expected to adhere to conservative financial discipline, which would be crucial to ratings.
During the period July-December FY21-22, textile exports of Pakistan surged 26 percent YoY, fielding $9.39 billion in total export remittances, as compared to $7.44 billion in the same period last year. This is attributable to increase in demand for textile products internationally and channeling of export orders towards Pakistani market. On a YoY basis, the exports of value-added textile items increased in both quantity and value in December 2021. Going forward, the textile sector’s outlook is expected to stay positive in the medium term where the demand for textile products is expected to sustain. In the local market, the textile sector has recorded strong performance.
The ratings are dependent upon the management’s ability to capitalize on growth opportunities in a competitive landscape, operate at optimal level and sustain margins, going forward. The future prospects of the Company will require significant enhancement in exports and parallel revenue streams to provide comfort to the fundamental source.
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