
Press Release
VIS Reaffirms Entity Rating of Gatron (Industries) Limited
Karachi, July 08, 2025: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Gatron (Industries) Limited (‘Gatron or the ‘Company’) to 'A-/A2' (‘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 good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Outlook on the assigned ratings remained ‘Stable’. Previous Rating action was announced on May 17, 2024.
Gatron (Industries) Limited is a publicly listed textile manufacturer specializing in polyester-based products. Incorporated in 1980, the Company is part of the Gani & Tayub Group (G&T). The product portfolio includes polyester filament yarn (PFY), PET preforms, polyester polymer/chips, and knitted fabrics. Its head office is located in Karachi, with manufacturing facilities situated in Hub, Balochistan.
The assigned ratings reflect Gatron (Industries) Limited established domestic market presence and vertically integrated operations across the polyester and packaging. The Company primarily caters to the local industry, with some presence in export markets, offering a product portfolio centered around polyester-based inputs, including filament yarn and PET preforms.
Revenue contracted during the review period due to reduced sales volumes and lower unit prices amid intensified dumping of imported yarn. Profitability was further impacted by low-capacity utilization and inventory losses due to decline trend of oil prices and associated petro chemical raw material and product prices accordingly. which continued to weigh on margins.
The ratings also take into account the sponsor’s strength and commitment, reflected in an equity injection during FY24. A total of Rs. 5.60 billion was raised through a rights issue, comprising Rs. 320 million in paid-up capital and Rs. 5.28 billion in share premium. This capital support has considerably strengthened the Company’s capitalization structure, resulting in a notable decline in debt levels and an improvement in the overall financial risk profile. In terms of liquidity and coverage, the Company has experienced weakening due to reduced operating cash flows. As a result, the debt service coverage ratio fell below 1x. However, the Company maintains adequate current assets to meet its obligations, as reflected in the short-term debt coverage ratio of 2.42 at end-9MFY25.
To restore profitability and enhance operational resilience, Gatron’s management has implemented several cost optimization and efficiency-driven initiatives. These include expanding solar energy capacity to reduce energy costs, increasing in-house manufacturing of critical components to minimize external dependencies, cost focused inventory management, and strategically focusing on higher value-added products. These measures, with effective collection of final anti-dumping duties as notified by National Commission of Pakistan, are expected to support margin expansion and contribute to improved profitability, particularly from FY26 onward. The ratings are dependent upon successful implementation of cost efficiency measures and their reflection on margins improvements, going ahead.
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://docs.vis.com.pk/docs/VISRatingScales.pdf