Lahore, November 19, 2020 (PPI-OT): The ratings of Ahmed Fine Weaving Limited (Ahmed Fine Weaving) reflect its improving business profile emanating from growth in topline over the last few years led by enhanced exports. Ahmed Fine Weaving is a family-owned public unlisted company with an adequate weaving capacity of 270 Air Jet looms with frequent BMR being done. The Company’s management is cognizant of the textile industry volatility and has planned phase-wise up gradation of machinery to remain competitive. The ownership of Ahmed Fine Weaving rests with the family of Mr. Ashar Fazal including his mother and children.
However, the governance framework can be further strengthened. During FY20, the Company managed to marginally increase the topline where pandemic induced lockdowns around the world led to deterioration in revenue as markets both; locally and internationally faced closures. The Company managed to sustain well and clocked higher revenue despite the pandemic situation and imposition of sales tax on the textile sector. The exports experienced an upward trend despite prior lockdowns which provided good contribution to the topline along with enhanced margins.
Higher finance costs impacted profitability but coverage remained in comfortable range. Reduction in policy rates and the moratorium relief by SBP provided respite to the whole sector. The markets gradually opened in some parts of the world towards the end of 1QFY21. Going forward, second wave of the pandemic has begun its course and lockdowns may be a cause of concern.
However, business community is expected to continue operations under strict SOPs, both; locally and in most of the export destinations of the Company. The Company took the SBP facility of deferment of the principal amount of the long-term loan. The Company enjoys a strong financial profile characterized by good working capital cycle, coverages, and an intermediately leveraged capital structure. The expansion projects have been financed through SBP loans with concessionary rates, which provides comforts.
The ratings are dependent on the management’s ability to uphold the entity’s performance trend. Meanwhile, maintaining strong margins and coverages to fulfill financial obligations will remain critical. Improvement in governance framework is considered important.
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
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