Karachi: VIS Credit Rating Company Limited has reaffirmed the entity ratings of Al Karam Towel Industries (Pvt) Ltd at ‘A-/A-2’, indicating good credit quality and a stable outlook. These ratings reflect the company’s ability to meet its long-term and short-term financial obligations amid varying economic conditions.

According to VIS Credit Rating Company Limited, Al Karam Towel Industries, a family-owned business specializing in the production and export of towel and terry items, has also expanded into the domestic yarn market. The company boasts a comprehensive operation with integrated textile mills that handle everything from spinning to finishing. This vertical integration supports its diverse product offerings, which include terry towels, bathrobes, and kitchen towels.

The reaffirmed ratings consider the inherent risks and cyclicality of the textile sector in Pakistan, which is subject to intense competition and economic fluctuations that influence demand. Despite these challenges, Al Karam has demonstrated resilience with increasing sales and growing demand in the domestic and export markets. However, the company faces ongoing pressures from high raw material costs and rising fuel and power expenses, which have slightly squeezed margins in recent fiscal periods.

Financially, Al Karam Towel Industries has maintained a healthy liquidity profile and a robust debt service coverage ratio. As of March 2024, the company has strengthened its equity base through profit retention, which has enhanced its capitalization profile. The ratings outlook remains contingent on the company’s ability to improve operational efficiencies, renegotiate client contracts, and recover profit margins in the face of escalating costs.

For more details on this rating affirmation, stakeholders are encouraged to contact VIS Credit Rating Company directly.