PACRA Assigns Initial Entity Ratings to US Denim Mills (Private) Limited

Lahore, March 21, 2023 (PPI-OT): US Denim Mills (Private) Limited (US Denim, The Company) is a prominent textile venture of US Group. The Group has a holding Company, named AJ Holding Limited, which also exists for managing investments in subsidiaries and associated companies. The sponsors are in charge of the individual enterprises, oversee the professional management, and are well-equipped and experienced. Strategic direction is meticulously worked out and rigorously followed once decided and finalized. The Company is principally engaged in the manufacturing and sale of denim fabric.

The Company’s management has experienced professionals, aided by comprehensive reporting, where operations of the Company are supervised with complete autonomy. US Denim has a subsidiary Company with name Us Fashion Turkey Tekstil Ticaret Anonim Sirketi. US Fashion Turkey Tekstil Ticaret Anonim Sirketi was established on 31 January 2017 in Istanbul, Turkey. The Company’s income comprises domestic and export sales. The assigned ratings derive comfort from US Denim’s association with the US Group.

The company reported a 33% increase in topline with marginal improvement in gross margins during FY22 on the back of higher volumetric sales and favourable prices. The major portion of the revenue base is derived from indirect exports (61%). The Company has also direct exports (38%) to Asia (Bangladesh, Srilanka), Africa (Morocco, Madagascar) and Europe (Turkey, Italy). US Denim continues to maintain a favourable capital structure and strong coverages signifying a robust financial profile. Going forward, the Company is planning CAPEX for vertical integration within the Group, which will be entirely funded from equity.

During 7MFY23, the textile exports of the country were valued at $10.08bln compared to $10.93bln, reflecting an 8% decline YoY – the declining trend has been recorded in the last few months. The decline in exports is driven by attrition in the demand pattern of export avenues. The ratings are dependent on the Company’s ability to maintain a strong business profile amidst current circumstances. Preserving low-leveraged capital structure and sound coverages remain imperative.

For more information, contact:
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

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