Lahore, March 04, 2022 (PPI-OT):Pakistan is the fourth-largest producer of cotton in the world. Punjab is of special importance in this regard as about 80% of the total production is produced in Punjab. This year, the cotton crop is being cultivated on about 4 million acres, which is expected to yield an average of more than 17 million per acre. The Punjab government is providing Rs. 1,000 per bag of approved varieties of seeds and whitefly protection to cotton growers for an area of more than 200,000 acres at a subsidy of Rs. 4.4 billion. The approved BT varieties of cotton are IUB 13, MNH 886, BS 15, Niab 878, and FH 142 while other approved varieties for specific districts should be selected in consultation with local agronomists.
Allawasaya Spinning Mills (Pvt.) Limited is a spinning mill manufacturing and sale of yarn. The Company manufactures various types of cotton rings and open-end yarn. The company generates almost 100% sales through local customers (70% are from Karachi and 30% are from Faisalabad). The upgrade in ratings reflects the improved business performance of the Company. Assigned ratings take into account the growth in revenues and higher margins.
The profitability of the Company has grown over the years supported by strong margins led by operating efficiencies. The company’s financial risk profile displays the improvement in cash flows, interest, and debt coverages along with a consistent low leveraged capital structure. Going forward, the planned CAPEX is expected to bring in efficiency gains and improve margins. The Company’s association with an established business family in the spinning sector of the textile industry provides comfort to the ratings.
The ratings are dependent upon the management’s ability to improve margins, profitability and financial profile of the Company. This includes keeping the debt levels manageable and improving the Company’s competitive position in the industry. The sponsor’s support and business acumen remain important for the ratings.
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