Lahore, December 21, 2018 (PPI-OT): The ratings reflect Sargodha Jute Mills Limited’s strong business profile in harmonization with jute industry dynamics in recent times. Pakistan’s jute industry depends 100% on raw jute imports from Bangladesh. Recent devaluation in currency has increased import cost of raw jute. The increase in cost is passed gradually, hence margins of the industry may be affected.
The Company’s revenues show steady growth in the last five years. In FY 18, sales revenue grew by ~14% and majority of the revenues come from sale of jute products to the Government and whole-sale dealers. Sargodha Jute Mills carry a strong financial profile depicted by strong coverages and moderate leveraging. Overall profitability of the company has showcased a healthy trend as the Company has ~40% market share and enjoys a strong repute in the jute industry of Pakistan.
The rating is dependent on the Company’s ability to sustain its business profile and continue to hold its position in the jute industry. At the same time, diversification in revenues and products is critical. Substantial decrease of margins leading to lower profits and excessive leveraging will have its implications on 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: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com