Lahore, December 28, 2020 (PPI-OT): The ratings reflect moderate business risk profile of Reliance Weaving Mills Limited (“Reliance Weaving” or “the Company”) emanating from volumetric growth in exports and better pricing. Over the years, the Company has undertaken continuous BMR translating into operational efficiencies and higher production volumes. The Company has sustained its overall margins despite the higher cotton price. Moreover, the Company has ramped up the capacity utilization significantly, in both spinning and weaving segments, give a comfortable picture, ahead.
The Company has a sizeable strategic investment in the energy sector in a group company. Reliance Weaving has a relatively squeezed financial capacity when considering leverage. However, the Company has availed moratorium relief, hence principal repayments are deferred for a year. The assigned ratings incorporate strong sponsors support and the explicit guarantee provided by majority sponsors on all debt related obligations of the Company. Moreover, synergies between the group companies are considered positive.
The ratings are dependent on the management’s ability to prudently mange the liquidity and debt profile of the Company, particularly working capital, while sustaining and improving its business margins. Going forward, support from sponsors would remain critical.
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
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