SHAHZAD TEXTILE MILLS LIMITED
Following is the text of press release issued by
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The revenue and margins of the Company decreased on comparable basis as the outdated unit no. 3 was phased out. The new sock unit is now operational and is expected to supplement revenues. The profitability of the Company remained low as exports suffered from lower demand for cotton yarn owing to the US-China trade war. The Company's maintains a low-leveraged capital structure, strong coverages and lean working capital cycles. Although these indicators have suffered due to lower sales and profitability but remain robust.
The Rating Watch signifies the prevailing uncertainty due to the outbreak of COVID-19 pandemic. This has impacted the entire textile chain as demand contracts due to shutdown in domestic and global markets and tough economic conditions. Recent SBP measures will provide some respite in this regard. The Company's production facilities have been shut down in line with the provincial Government's directive of lockdown, with the exception of sock manufacturing unit as it has verified export orders. PACRA is closely monitoring the situation and will take rating action accordingly.
The ratings depend on sustaining operations and resumption of production activities. Maintaining business margins post-expansion into socks manufacturing is important. Meanwhile, prudent working capital management and maintaining financial discipline will remain critical.
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© Pakistan Press International, source
