Lahore, December 24, 2021 (PPI-OT):The ratings reflect improved business risk profile of Reliance Weaving Mills Limited (“Reliance Weaving” or “the Company”) emanating from volumetric growth in exports as well as increase in local sales and better pricing. Over the years, the Company has undertaken continuous BMR translating into operational efficiencies and higher production volumes. The Company has improved its overall margins, these results are due to strong spinning margins and healthy weaving business. Major reason of these results is procurement of cotton in timely manner and at competitive price.

Moreover, the Company has ramped up the capacity utilization significantly, in both spinning and weaving segments, give a comfortable picture, ahead. Going forward, the Company aims to undertake further expansion, financed through a mix of internal and external sources. The Governance of the Company is considered strong. The Company has a strategic investment in the energy sector in a group company. The Financial risk matrix has shown improvement over the years. Healthy increase in coverage and reduced debt payback adds the comfort.

Ratings positively take in to account the track record and presence of experienced and professional management team which possesses considerable experience in the textile business. The assigned ratings incorporate strong sponsors support and the explicit guarantee provided by majority sponsors on all debt related obligations of the Company. Moreover, synergies between the group companies are considered positive.

The upgrade in the ratings is the result of improved revenue and profitability along with the other strong financial parameters. Moreover, comfort can also be drawn from the business risk profile backed by the healthy growth in the business correspondent space as well as benefits from the strong financial position of the sponsors.

The ratings are dependent on the management’s ability to prudently mange the liquidity and debt profile of the Company, Prudent managing of cash cycle in the increasing key policy rate scenario, while sustaining and improving business margins remains vital. Going forward, support from sponsors would 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