Islamabad, The Pakistan Credit Rating Agency Limited (PACRA) has updated its entity ratings for KTM Leather Pvt. Limited, reflecting the company's enduring presence in the challenging tannery sector and its affiliation with the Mahmood Group. The rating adjustment comes amid a broader downturn in Pakistan's leather industry, influenced by global market dynamics and internal industry factors.
According to The Pakistan Credit Rating Agency Limited, KTM Leather, previously known as Khawaja Tanneries Pvt. Limited, is a key player in the production of various leather stages, contributing to a sector that spans gloves, apparel, footwear, and other leather goods. Despite a notable decline in tanned leather exports from Pakistan — dropping significantly over five years — segments like apparel and footwear have seen some growth. Nevertheless, the overall export figures for the sector have diminished, attributed to reduced global demand, economic pressures, and geopolitical strains.
KTM Leather's operational focus includes navigating these industry headwinds, capitalizing on opportunities in value-added product offerings, and adapting to the fast-evolving fashion trends and market demands. While the company benefits from factors like a growing population and favorable currency rates for exports, challenges such as technology adoption, skilled workforce availability, and competitive pressures remain pertinent.
Financially, KTM Leather has shown resilience, managing to uphold its revenue through strategic responses to currency fluctuations, although its profit margins have seen a compression. The company's capital structure and financial health are areas of focus, with an emphasis on managing leverage and enhancing liquidity.
The ratings provided by PACRA will hinge on KTM's ability to maintain its market position, navigate the conservative leather industry landscape, and execute strategies effectively, especially in producing high-fashion, finished leather products. The commitment to financial prudence and sustaining a robust liquidity profile are deemed crucial for KTM's ongoing stability and growth.
KTM Leather, a legacy of the pre-independence era, has diversified its operations under the Mahmood Group's umbrella, recently venturing into leather footwear alongside its traditional leather production, marking significant steps in its evolution and adaptation to market trends.