Lahore, July 02, 2021 (PPI-OT):The ratings reflect moderate business profile of Kohat Textile Mills Limited (Kohat Textile). The Company caters to the needs of local industry and deals in specialized products i.e. polyester yarn, acrylic yarn and viscose yarn. During 9MFY21, Company’s revenue improved to PKR 2.5bln (9MFY20: PKR1.9bln); Sales are done locally. Margins and net profitability enhanced recently where the Company recorded loss in FY20.In current year, lower finance cost supported profitability.
Non-core expenses, emerged in 9MFY21, should be contained going forward. Current ratio remained comfortable. COVID-19 pandemic is an ongoing challenge. The proactive measures are taken by the regulators and other concerning bodies have mitigated the potential damages much anticipated from this pandemic. Vigilance is required as the loan repayment cycle remains amid variants of the pandemic continue to re-emerge. The financial risk matrix reveals moderate leveraging where there is room for improvement in coverage.
Further augmentation in core coverage will provide comfort with approaching scheduled repayments. The assigned ratings derive comfort from an experienced management team, strong financial muscle of the Sponsors and their timely support to the Entity in the form of subordinated loans. Going forward, the Company is planning to acquire debt to finance CAPEX. Material improvement in cash flows in line with upcoming debt obligations remains imperative.
The ratings are dependent on the Company’s ability to sustain its operations in prevailing conditions. Significant deterioration in revenues and/or debt coverages due to the prolonged downturn leading to higher financial risk or subdued profitability will have a negative impact on the ratings. Saif Group’s support to the Company will remain critical.
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