Press Release
VIS Reaffirms Entity Ratings of Ahmed Oriental Textile Mills Limited
Karachi, July 14, 2026: VIS Credit Rating Company Limited (VIS) reaffirms entity ratings of Ahmed Oriental Textile Mills Limited (‘AOTML’ or ‘the Company’) at 'A-/A2' (‘Single A Minus’/’A Two’). Medium to long term rating of 'A-' indicates good credit quality; Protection factors are adequate. Risk factors may vary with possible changes in the economy. Short term rating of 'A2' indicates a good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Outlook on the assigned rating is ‘Stable’. Previous Rating action was announced on April 15, 2025.
Ahmed Oriental Textile Mills Limited (‘AOTML’ or ‘the Company’) was incorporated in 1989 as a public limited company and was subsequently delisted from the Karachi Stock Exchange and the Lahore Stock Exchange in 2002 and 2003, respectively. The Company is engaged in the manufacture and sale of yarn in both domestic and export markets. Its manufacturing facilities are located in Rahim Yar Khan, while the registered office is situated in Karachi.
Pakistan’s textile spinning sector has undergone a structural contraction in recent years, with sizable number of units ceasing operations over the past five years, reflecting sustained competitive, structural, and cost pressures. The sector has been impacted by policy changes in taxation, Elevated energy tariffs, despite some moderation, remain significantly above regional benchmarks, affecting cost competitiveness. In addition, declining domestic cotton production has increased reliance on imports, exposing mills to price volatility and supply chain disruptions. While vertically integrated and energy-efficient players have demonstrated relative resilience, overall industry profitability and capacity utilization have remained under pressure, contributing to ongoing consolidation within the spinning segment.
AOTML’s ratings are reaffirmed, underpinned by its established presence in the textile spinning sector and consistent operational performance. This is reflected in steady production levels and capacity utilization, which have remained broadly stable despite prevailing industry pressures.
The ratings also reflect the Company’s stretched financial risk, characterized by a leveraged capital structure and reliance on short-term borrowings to meet working capital requirements amid constrained internal cash generation. Nonetheless, gearing showed a marginal improvement in 1HFY26, supported by a reduction in borrowings and a marginal increase in equity base. Also, the liquidity and debt servicing indicators remained under pressure during FY25, as evidenced by a weak current ratio and DSCR. However, partial improvement was observed in 1HFY26 on the back of improved cashflows and working capital efficiency. Sponsor support also provided some temporary relief to the liquidity.
Going forward, the ratings will remain sensitive to the Company’s ability to sustain cash generation, manage working capital efficiently and improve profitability.
For further information on this rating announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria:
Industrial Corporates
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
VIS Issue/Issuer Rating Scale
https://vis.com.pk/docs/VISRatingScales.pdf