Lahore, August 24, 2022 (PPI-OT):The ratings reflect the small yet adequate business profile of Khas Textile Mills (Pvt.) Limited. Over the last two years, the Company’s revenue base recorded a healthy increase. The company manufactures various types of the cotton ring and open-end yarn. The company is associated with Khas Group of Industries where the group has a presence in diverse sectors; including textile, aluminium, poultry, socks, knitwear, and import of building hardware. The Company’s sales volume was enhanced due to an increase in local sales from last year and better yarn prices.

The pattern of sales volume will remain correlated with demand patterns in the local market which in turn is connected with the demand trend of export destinations. Margins recorded improvement due to better yarn prices. Improved financial risk profile attributable to a declined leveraging and healthy increase in coverage. The debt structure is skewed towards long-term borrowings. Further, room to borrow displayed improvement along with sizably reduced debt payback. Going forward, upholding improved performance recorded in recent quarters along with sustaining the financial risk profile remains important. Efficient utilization of enhanced capacity is considered essential.

During FY22, Pakistan’s textile exports surged to $19.3bln (recording a growth of 26%). Exports grew owing to increased volumetric growth of (16% YoY) in the value-added segment, a steep rise in global demand, and record high cotton prices. Under the value-added category, the knitwear segment remained the top performer by posting 34% YoY growth in exports to $5.1 billion in FY22 due to a sharp rise in global demand, especially in the US and European countries. Other value-added segments such as ready-made garments, bed wear, and towel posted YoY growth of 29%, 19%, and 19% to $3.9 billion, $3.3 billion, and $1.1 billion respectively.

However, a slowdown is expected in textile demand amid burgeoning inflationary pressures in the exporting destinations, especially in the US and European countries. Strengthening of governance practices will have a positive impact on the ratings. Any deterioration in debt coverages leading to higher financial risk or substantial losses will have a negative impact on 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