Lahore, The Pakistan Credit Rating Agency Limited (PACRA) has sustained the entity ratings of Shahzad Textile Mills Limited at 'A-' for long-term and 'A2' for short-term, continuing its watch status due to the company’s financial strains and industry challenges. Shahzad Textile, known for its production of yarn and socks, is navigating a period marked by significant economic pressures, including raw material import difficulties and increased production costs.

According to The Pakistan Credit Rating Agency Limited, the Pakistani spinning industry is experiencing a substantial shift with a current sizeable output and a greater dependency on imported cotton due to local production variations. Shahzad Textile, part of this sector, faces direct impacts from these changes, notably in its financial performance, which has seen a decline due to the cost pressures and economic environment.

Despite the industry's and company’s hurdles, Shahzad Textile has leveraged its diversified procurement strategy to manage the import restrictions effectively. However, the recent financial period indicated operational challenges with a break-even in operating losses but a net loss overall because of heightened finance costs.

Shahzad Textile’s capital structure and liquidity management are under scrutiny, with PACRA’s 'Watch' status reflecting potential risks of equity erosion if current trends persist. The company’s ratings will hinge on its management's ability to stabilize and improve financial and operational performance, particularly in managing costs and sustaining profitability.

PACRA’s monitoring will focus on Shahzad Textile's strategies to counteract the negative pressures from the market and financial conditions, where any significant shifts could influence future ratings.