Lahore, April 01, 2019 (PPI-OT): Salfi Textile Mills Limited – a public listed company – primarily engaged in the manufacturing and sale of different varieties of yarn is majorly owned by Mr. Anwar Tata Family. Tata group currently owns three textile mills i.e. Island, Salfi and Tata Textile Mills Limited. The Group has also diversified into power and food sectors. Spinning industry has recently suffered as lower demand for cotton yarn from China owing to trade war with USA has lead to lower exports volume and margins.
Consequently, Salfi Textile’s margins and, in turn, profitability have deteriorated. The financial risk profile of the Company is characterized by moderately leveraged capital structure. However, coverages remain under pressure due to relatively small size of cashflows and high interest rates. The working capital cycle remains stretched. Long association of experienced and professional management team adds comfort. Going forward, management is planning to merge all three textile entities in order to benefit from the economies of scale.
The ratings are dependent on improving margins while maintaining its financial profile via better core coverages. Meanwhile, prudent management of short term liquidity would be essential. Going forward, materialization of successful merger of all three textile entities would be significant for 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