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SUTM operates through a manufacturing facility located in Muzaffargarh, Dera Ghazi Khan Division with 34,896 spindles installed. The company has historically been operating at high capacity utilization levels. During FY18 and FY19, the company replaced its old Chinese machinery with new Japanese ring frames through BMR thereby enhancing productivity and efficiency of its manufacturing unit. Around three fourth of the yarn is produced on courser counts for Chinese denim manufacturers. The remaining is produced on finer counts for local denim, hosiery and knitwear manufacturers.
Assigned ratings to SUTM incorporate the company's association with
Assessment of financial risk profile incorporates improving profitability, liquidity and capitalization indicators. Sales revenue of the Company depicted an increasing trend on a timeline basis with exports comprising around three-fourth of total sales. Exports sales are concentrated in
Going forward, maintaining liquidity indicators at similar levels is considered important from a ratings perspective. Equity base of SUTM has increased over time on account of internal capital generation. Given no further projected increase in long term debt, leverage and gearing indicators are expected to remain within manageable levels. Future trend with respect to leverage indicators will be an important rating consideration.
For more information, contact:Director Compliance and Rating Analytics,VIS Credit Rating Company LimitedVIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,Phase VII, DHA,
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