PACRA Maintains Ratings of Fazal Weaving Mills Limited
Lahore, January 22, 2018 (PPI-OT):The ratings of Fazal Weaving primarily reflect irrevocable and unconditional guarantee on all obligations from financial institutions by Fazal Cloth Mills Limited (Fazal Cloth) – the parent. Fazal Cloth is rated by PACRA (LT Rating: A-) Fazal Weaving, a wholly owned subsidiary of Fazal Cloth, runs a small sized spinning unit. The recent capacity enhancement helped in rationalization of fixed cost translating into improved margins; hence, generating profit for the company. Fazal Weaving’s standalone risk profile is improving.
However, it is still constrained by, (i) high business concentrations – customer as well as geographical (ii) debt driven expansion thus keeping pressure on coverages, and (iii) highly leveraged capital structure. However, regular financial support from Fazal Cloth cushions the risk profile. With better utilization level, nourishing margins, and utilization of free cash-flows to settle debts, the management expects its standalone profile to improve. The rating are dependent on continuation of irrevocable and unconditional guarantee on financial obligation by the parent company. Meanwhile, improvement in stand-alone performance of the entity is considered important.
For more information, contact:
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